HARRIMAN v. HANCOCK COUNTYUnited States Court of Appeals, First Circuit

627 F.3d 22 (2010)

Howard, Circuit Judge [delivered the unanimous opinion of the court].

This civil rights action involves competing accounts of an arrestee’s weekend stay in Maine’s Hancock County Jail. Plaintiff David Harriman, although he remembers virtually nothing that occurred over the entire weekend, contends that one or more correctional officers beat him until he sustained a lasting brain injury. Defendants Hancock County, its sheriff and several correctional officers assert that Harriman fell on his head. Harriman appeals the district court’s preclusion of two affidavits and entry of summary judgment in defendants’ favor. After careful review, we affirm.

I. BACKGROUND

. . .

A. The Weekend

… Maine State Trooper Gregory Mitchell responded to a disturbance at the Blue Hill Hospital involving a disorderly emergency room patient later identified as Harriman. … Mitchell found Harriman … in the emergency room. Harriman appeared to be drunk. Because Harriman was prohibited from consuming alcohol in connection with a previous infraction, Mitchell arrested him.

Mitchell escorted Harriman outside to the police cruiser and searched him. Harriman launched a stream of epithets against Mitchell, including threats to Mitchell and his children. As Mitchell guided Harriman into the cruiser, Harriman resisted and fell to the ground, pulling Mitchell down with him. Mitchell got back on his feet and hoisted Harriman up and into the cruiser. Once in the cruiser, Harriman spit at Mitchell and then fell asleep.

At about 8 p.m., the pair arrived at the jail. … Harriman leveled several new expletives against Mitchell, and struggled against Mitchell’s hold until correctional officers Ryan Haines and Michael Pileski arrived to take custody. Mitchell then went to the adjacent booking room to complete the necessary paperwork regarding the evening’s events.

. . .

With some assistance from Haines, Harriman changed into an anti-suicide smock. …

A little after 10 p.m., Sergeant Heather Sullivan, from her position in or around the control room, heard Harriman “yelling” and “hollering” in his cell. When Sullivan looked over, she saw Harriman “banging around” his cell naked; she also noticed blood on the bridge of his

Page 1 of 201

nose. Sullivan radioed Haines and instructed him to investigate. Harriman greeted Haines with shouted expletives and, from behind the glass partition, drew his fist back as though he would punch Haines. Sullivan soon arrived outside Harriman’s cell. While she and Haines were deciding on a course of action, they both heard a loud “thump” or “thud” from inside Harriman’s cell. Although neither Sullivan nor Haines saw what happened in Harriman’s cell, Pileski and another correctional officer, Crystal Hobbs, from their vantage point in the control room, saw Harriman fall to the floor in a leftward motion. Pileski further saw Harriman strike his head as he fell against the lefthand concrete wall of his cell.

Haines entered the cell and saw Harriman lying on the floor in his own urine, apparently unconscious. Harriman then had what appeared to be two seizures, each lasting a matter of seconds. At Sullivan’s request, Hobbs called an ambulance from the control room at about 10:20 p.m. The ambulance arrived within several minutes and took Harriman to the hospital. Haines accompanied Harriman in the ambulance and stayed with him at the hospital until relieved by another correctional officer later that evening.

Harriman remembers next to nothing about his jail stay. From his arrest on Friday until he woke up at home on Monday or Tuesday night, Harriman remembers only the following: “a lot of hollering;” “echoes from hollering;” “flashes of light;” “somebody saying he’s had enough or I think that’s enough or maybe even that’s enough;” “seeing my wife’s cousin [Foster Kane, another jail detainee] but just barely;” … and “the smell ... [of] urine mixed with cleaning fluid.”

Given his anamnestic difficulties, Harriman relies on [arresting officer] Mitchell’s deposition testimony and affidavits from two other witnesses to contradict the defendants’ version of events.

Mitchell testified at deposition that he spent roughly an hour in the booking room finishing up paperwork after transferring custody of Harriman to Haines and Pileski. When Mitchell exited the booking room at about 9 p.m., he noticed Harriman through a glass partition in a room known as secure holding, not in HD-1, which was further inside the jail. According to Mitchell, Harriman appeared to be unaccompanied and was wearing civilian clothes.

Foster Kane, the detainee who Harriman vaguely remembers seeing, stated in an affidavit that, from his cell near the booking room, he “heard yelling and screaming and loud thuds of someone hitting a wall.” He further stated that the “commotion went on for approximately 45 minutes before I saw the correctional officers dragging David Harriman into my cell block.” And, “David had two black eyes, a cut on his nose, and a cut on his forehead over his right eye.”

Jenny Sheriff, the emergency medical technician who responded to the jail’s call for an ambulance, stated in an affidavit that she “picked Mr. Harriman up in [secure holding].” Sheriff noticed dried blood on Harriman’s nose, and was “certain that I did not receive the call to respond to the Jail immediately after the injuries occurred.” She also stated that Harriman was naked and that there was “no robe or suicide smock in his cell.”

Page 2 of 201

… The next thing Harriman remembers is waking up at home on Monday or Tuesday night [after the prior Friday’s events].

B. The Lawsuit

… Harriman brought a civil rights action against the defendants in federal district court in Maine. He asserted five claims premised on constitutional violations (excessive force, false arrest, conspiracy under both §§ 1983 and 1985, and deprivation of due process) and three claims premised on state tort law (negligence, intentional infliction of emotional distress, and punitive damages). In due course, the magistrate judge assigned to the case entered a scheduling order setting dates for, among other things, initial disclosures (July 30, 2008) and close of discovery (December 3, 2008). An amended scheduling order required dispositive motions by January 15, 2009. Trial, if necessary, was anticipated for April 2009.

Harriman’s initial disclosure identified fourteen individuals likely to have discoverable information; critically, however, it did not identify either Kane [a detainee witness] or Sheriff [medical technician responding to jail ambulance request]. See Fed.R.Civ.P. 26(a)(1)(A)(i) (requiring identification of individuals “likely to have discoverable information”). Discovery proceeded over the next several months, during which the parties exchanged written discovery and deposed almost all individuals that Harriman had identified in his initial disclosure.

On January 15, 2009, the defendants moved for summary judgment. On February 17, 2009, two days before Harriman’s response to the defendants’ motion was due and more than two months after discovery had closed, Harriman’s attorney sent the defendants a “supplemental” initial disclosure that identified Kane and Sheriff as two additional individuals likely to have discoverable information. In a cover letter to the amended disclosure, Harriman’s attorney explained that he had retained a private investigator, that the investigator had located Kane and Sheriff, and that Harriman intended to submit affidavits from Kane and Sheriff in opposition to summary judgment. On February 19, 2009, Harriman filed his opposition papers, which drew heavily from the Kane and Sheriff affidavits in contesting the defendants’ motion.

In their reply, the defendants requested that the magistrate judge strike these affidavits as a sanction pursuant to Fed.R.Civ.P. 37(c)(1). The magistrate judge held a telephone conference with counsel to discuss this request. Following the conference, which was not transcribed, Harriman submitted a memorandum and supporting affidavits addressing the failure to identify Kane and Sheriff earlier. Those affidavits revealed that Harriman’s attorney had not retained the investigator until January 5, 2009, ten days before the defendants’ summary judgment motion was due and more than a month after the close of discovery.

The magistrate judge issued an order that precluded the Kane and Sheriff affidavits as a sanction, and recommended summary judgment in favor of the defendants on all remaining claims. The magistrate judge reasoned that Harriman offered “precious little justification or explanation for his own failure to properly prepare his case and complete discovery in a timely

Page 3 of 201

fashion,” and that preclusion was necessary “if the court’s scheduling orders are to maintain any credibility at all.” … [T]he magistrate judge stated that summary judgment was [also] appropriate even if one considered the Kane and Sheriff affidavits, and so purported to analyze Harriman’s claims under the full record. When the magistrate judge analyzed Harriman’s excessive force claim, however, she disregarded the Kane affidavit on the basis of her earlier decision precluding that affidavit:

Clearly if Harriman has met his burden … on his theory that he was deliberately beaten by the guards by providing competent evidence of his theory, a trial would be necessary on this count. However, I have determined that the Kane Affidavit must be stricken because Harriman has in no way demonstrated a justification for his late disclosure (and tardy efforts to investigate). The Sheriff Affidavit also is stricken, but even if it were not, this evidence would not be sufficient to carry Harriman’s burden of providing a dispute of fact that justifies sending this count to trial. (Emphasis in original.)

The district court adopted in full the magistrate judge’s report and recommendation and entered judgment.

II. DISCUSSION

We address two threshold issues before reaching the propriety of summary judgment.

. . .

B. Preclusion of the Kane and Sheriff Affidavits

. . .

Harriman argues, essentially, that precluding the affidavits was wrong because they were important to his case. The defendants counter that preclusion was a proportional response to Harriman’s failure to identify Kane and Sheriff earlier. Each individual, the defendants contend, could have been identified in the exercise of reasonable diligence during discovery, and Harriman's failure to do so prejudiced the defendants because they sought discovery and moved for summary judgment without knowing about two prospective witnesses on whom Harriman later relied.

We begin our inquiry with the Federal Rules of Civil Procedure, which provide the basic framework. Rule 26 requires a party, without awaiting a discovery request, to “provide to the other parties ... the name ... of each individual likely to have discoverable information—along with the subjects of that information—that the disclosing party may use to support its claims or defenses.” Fed.R.Civ.P. 26(a)(1)(A)(i). That obligation is a continuing one. See Fed.R.Civ.P.

Page 4 of 201

26(e)(1)(A) (requiring a party to supplement its disclosure promptly “if the party learns that in some material respect the disclosure or response is incomplete or incorrect”).

Failure to comply with disclosure obligations can have severe consequences. Rule 37 authorizes district courts to sanction noncomplying parties; although sanctions can vary depending on the circumstances, “[t]he baseline rule is that ‘the required sanction in the ordinary case is mandatory preclusion.’ ” [S]ee Fed.R.Civ.P. 37(c)(1) (providing that if a party fails to disclose under Rule 26, that “party is not allowed to use that information or witness to supply evidence on a motion”).

We consult an array of factors when reviewing preclusion decisions. They include the sanctioned party’s justification for the late disclosure; the opponent-party’s ability to overcome its adverse effects (i.e., harmlessness); the history of the litigation; the late disclosure’s impact on the district court’s docket; and the sanctioned party’s need for the precluded evidence.

. . .

Harriman’s justification for the late disclosure is nonexistent. He … do[es] not explain, let alone justify, Harriman’s late disclosure or his decision to begin looking for Kane and Sheriff in earnest only after discovery closed.

The record shows beyond hope of contradiction that Harriman knew very early on that Kane and Sheriff could help his case. As early as 2006, Harriman knew that Kane was in jail with him over the weekend. It is one of the few fragments of information that Harriman remembered, and Kane’s name appeared on an inmate list that the defendants produced during discovery. Harriman also knew, as early as 2007, that Kane had information that supported his claims. Coincidentally, Kane is the first cousin of Harriman’s spouse. Kane wrote a letter to Harriman’s spouse in April 2007—before this case even commenced—stating “that he believed David [Harriman] had been beaten by corrections officers at the Hancock County Jail on October 20, 2006.” Despite knowing Kane’s importance to his case, Harriman made no meaningful attempt to find him until after discovery closed.

So, too, with Sheriff. Harriman may not have remembered Sheriff, but multiple witnesses testified at their depositions that an EMT responded to the jail and brought Harriman to the hospital in an ambulance. The defendants also produced the ambulance’s so-called run report.Among other things, the run report described the circumstances surrounding the call and Harriman’s condition when Sheriff arrived. True, the run report did not reveal Sheriff’s identity: in what appears to be a [convenient?] photocopying error, the bottom of the page cuts off after asking for the “SIGNATURE OF CREW MEMBER IN CHARGE” ( i.e., Sheriff). But the salient point is that Harriman knew during discovery that an EMT existed who had information that could support his claims, and yet he did nothing whatsoever to find that individual until after discovery closed.

Page 5 of 201

As for the next factor, Harriman’s late disclosure was not a harmless inconvenience. The defendants prepared and filed a summary judgment motion premised on evidence submitted before the discovery deadline. Harriman opposed the motion with affidavits obtained after that deadline, from witnesses whom he had not provided the defendants an opportunity to depose. While perhaps not as palpable as if trial were looming, the prejudice to defendants was real.

Furthermore, Harriman took no steps to minimize the harm caused by the late disclosure. Harriman’s attorney retained an investigator ten days before the defendants' summary judgment motion was due, but did not put the defendants or the court on notice that he was attempting to locate Kane and Sheriff. … And while Harriman’s attorney was actively looking for them, he sought and received an extension to file an opposition to summary judgment—not in order to find additional witnesses—but on the ground that he was busy with other cases and had been sick. In this light, Harriman’s late disclosure begins to look less like an oversight and more like a tactic.

… Harriman also failed timely to respond to the defendants’ request to strike the Kane and Sheriff affidavits. Here again the magistrate judge gave Harriman one last extension. Although these infractions may not rise to the level of dereliction displayed in other cases, … they do place the court's preclusion decision in context.

The late disclosure’s impact on the court’s docket is apparent. Harriman disclosed Kane and Sheriff more than seven months after the deadline for initial disclosures, more than two months after the discovery deadline, and about a month after the defendants had moved for summary judgment. District courts have an interest in managing their dockets without such disruptions. (“Whenever a party, without good cause, neglects to comply with reasonable deadlines, the court’s ability to manage its docket is compromised.”)

The only factor that favors Harriman is his need for the affidavits. Reversals based on a sanctioned party’s need for precluded evidence are rare, and seldom based on that factor alone.

. . .

In sum, given the above, we cannot fault the district court for precluding the affidavits. Another judge faced with the same facts might have selected a lesser sanction. But preclusion was not “so wide of the mark as to constitute an abuse of discretion.” ………………………….. . . .

III. CONCLUSION

For these reasons, the judgment of the district court is affirmed. …

Page 6 of 201

Notes and Questions:

1. The plaintiff attorney’s investigator found Kane and Sheriff. The plaintiff’s attorney then speedily submitted their affidavits, in opposition to the defendants’ summary judgment motion. Why did the courts preclude those affidavits from consideration? Do you agree with the court, when it says: “the prejudice to defendants was real”?

2. Harriman further refers to FRCP 26(e)[(1)(A)]. What does that rule require, and why was it breached in this case?

3. There is a veritable arsenal of power that FRCP 37 authorizes, when a judge is considering appropriate sanctions. Harriman dealt with a “preclusion” order. The flip side of such an order is an “establishment” order. The court may establish certain contested facts, as a sanction, when a recalcitrant party is not playing by the Rules. What other important sanctions are available to a federal judge under Rule 37?

4. FRCP 1 provides that the Rules “should be construed and administered to secure the just, speedy, and inexpensive determination of every action.” Was that Rule followed in this instance? Were these courts being too technical? Were the sins of the lawyer improperly attributed to the plaintiff? Could the court have issued a more appropriate Rule 37(b)(2)(A) sanction?

Page 7 of 201

VINOTEMP INT’L CORP. v. WINE MASTER CELLARS, LLLPOrder Granting Motion in Limine to Preclude Evidence of Damages (In Chambers)

United States District Court, C.D. California2013 WL 5366405 (2013)

AUDREY B. COLLINS, District Judge.

Pending before the Court is Plaintiff Vinotemp Int’l Corp.’s (“Vinotemp’s”) Motion in Limine to Preclude Evidence of Damages ... [which] [d]efendant Wine Master Cellars, LLLP (“Wine Master”) opposed.... The Court finds this matter appropriate for resolution without oral argument and will not hear arguments at the February 11, 2013 pretrial conference. For the reasons below, the motion is GRANTED and Wine Master is precluded from offering evidence of damages at trial. Vinotemp moves to exclude Wine Master’s evidence of damages on two grounds: (1) Wine Master failed to properly disclose its damages categories and computations under Federal Rule of Civil Procedure 26(a)(1)(A)(iii) and (e); and (2) Wine Master’s damages are impermissibly speculative. Because exclusion is justified on the first ground, the Court need not address the second. Federal Rule of Civil Procedure 26(a)(1)(A)(iii) requires that parties disclose “a computation of each category of damages claimed by the disclosing party—who must also make available for inspection and copying as under Rule 34 the documents or other evidentiary material, unless privileged or protected from disclosure, on which each computation is based, including materials bearing on the nature and extent of injuries suffered[.]” This rule was intended in part to “accelerate the exchange of basic information about the case and to eliminate the paper work involved in requesting such information[.]” Parties also have an obligation to supplement initial disclosures when prior disclosures are “incomplete or incorrect,” if the additional information has not already been disclosed during discovery. Fed.R.Civ.P. 26(e). Rule 37(c) (1) “gives teeth” to Rule 26(a) and (e)’s requirements “by forbidding the use at trial of any information required to be disclosed by Rule 26(a) that is not properly disclosed.”1 The Ninth Circuit considers Rule 37 “ ‘a self-executing, automatic sanction to provide a strong inducement for disclosure of material,’ ” and therefore a finding of willfulness or bad faith is not required. To avoid this “automatic” sanction, the party subject to sanctions bears the burden of

1 Rule 37(c)(1) states: If a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless. In addition to or instead of this sanction, the court, on motion and after giving an opportunity to be heard: (A) may order payment of the reasonable expenses, including attorney’s fees, caused by the failure; (B) may inform the jury of the party’s failure; and (C) may impose other appropriate sanctions....

Page 8 of 201

showing its failure to disclose the information was either “substantially justified” or “harmless.” The district court’s decision to exclude evidence is discretionary and the court is given “ ‘particularly wide latitude ... to issue sanctions under Rule 37(c)(1).’ ” At trial, Wine Master plans to seek damages in the form of lost sales calculated from Vinotemp’s sales of its own wine racks. In its July 8, 2011 initial disclosures, Wine Master alluded to Vinotemp’s sales, but did not expressly disclose lost profits or any other category or computation of damages; instead, it stated only:

As of the date of this Rule 26 [initial core] disclosure, discovery has not commenced and WMC [i.e., Wine Master Cellars] is unaware of all sales of the Vinotemp Rack sold in violation of the Settlement Agreement between the parties. Consequently, WMC is unable to calculate any potential damages claim it may assert and reserves the right to do so at the appropriate time.

There is no dispute that Wine Master never formally supplemented this initial disclosure. ........... Wine Master’s failure to disclose its lost profits theory of damages or any other category or computation of damages undoubtedly violated Rule 26, so Wine Master must now demonstrate that this failure was either substantially justified or harmless. Although not entirely clear, Wine Master appears to argue that its violation of Rule 26 was harmless because (1) damages are only subsidiary to its primary claim for specific performance; and (2) Vinotemp has suggested that it only made minimal sales in violation of the settlement agreement.   Neither of these contentions demonstrates that Wine Master’s failure to disclose damages was harmless. Even if damages are minimal and a subsidiary issue, Wine Master’s failure to disclose damages still impedes Vinotemp’s ability to defend against these claims at trial [italics added]. The Court would then have to move the trial date to allow Vinotemp to conduct additional discovery, which demonstrates that Wine Master’s failure was not harmless. See Hoffman, 541 F.3d at 1180 (“Later disclosure of damages would have most likely required the court to create a new briefing schedule and perhaps re-open discovery, rather than simply set a trial date. Such modifications to the court’s and the parties’ schedules supports a finding that the failure to disclose was not harmless.”).

. . . This record does not demonstrate that Wine Master’s violation of Rule 26 was substantially justified. First, Vinotemp points out that ... Wine Master had data on which to base its calculations because Vinotemp provided sales information on several occasions before and after its March 2012 letter, such as in October 2011 discovery responses; an October 2011 Rule 30(b)(6) deposition; a June 2012 declaration; and a July 2012 declaration. . . .Therefore, Wine Master should have disclosed lost profits as a category of damages and provided at least some rough calculation of lost profits damages based on the sales Vinotemp disclosed. “[T]he ‘computation’ of damages required by Rule 26(a)(1)(C) contemplates some analysis,” enough so that the opposing party can “understand the contours of its potential exposure and make informed decisions as to settlement and discovery.” Wine Master has not

Page 9 of 201

demonstrated that its failure to disclose its damages categories and computations was substantially justified.

CONCLUSION The Court GRANTS Vinotemp’s motion in limine and EXCLUDES all evidence of Wine Master’s damages from trial.IT IS SO ORDERED.

Page 10 of 201

MARRESE v. AMERICAN ACADEMY OF ORTHOPAEDIC SURGEONSUnited States Court of Appeals, Seventh Circuit (en banc)

726 F.2d 1150 (1984)Reversed on other grounds, 470 U.S. 373 (1985)

POSNER, Circuit Judge [wrote the 4-3 majority opinion—the lead dissenting opinion is provided below, while two other opinions are deleted].

These consolidated appeals present important questions relating to ... the responsibilities of federal district judges in controlling pretrial discovery. In 1976 the American Academy of Orthopaedic Surgeons, a private association, rejected the plaintiffs’ applications for membership, without a hearing or a statement of reasons. The plaintiffs sued the Academy in an Illinois state court, claiming among other things that the common law of Illinois and the Illinois constitution required the Academy to grant a hearing on their applications and to use reasonable standards in deciding whether to accept the applications. The plaintiffs made no claim under Illinois antitrust law; nor did they, at that time, bring a federal antitrust suit. . . . After losing in the Illinois Appellate Court, Dr. Treister (joined by Dr. Marrese) brought this suit in federal district court for damages and injunctive relief under section 1 of the Sherman Act, 15 U.S.C. § 1. The complaint alleged that the Academy is “a monopoly in its field, possessed of substantial power to control the market for orthopaedic surgical services,” and that the plaintiffs were refused membership because they compete too vigorously with existing members of the Academy. ... The plaintiffs asked the Academy to produce its files relating to all denials of membership applications between 1970 and 1980. The Academy refused. When it persisted in its refusal after the district judge issued an order to produce, the judge held the Academy in criminal contempt and fined it $10,000. . . .

A motion under Rule 26(c) to limit discovery requires the district judge to compare the hardship to the party against whom discovery is sought, if discovery is allowed, with the hardship to the party seeking discovery if discovery is denied. He must ... consider the possibility of reconciling the competing interests through a carefully crafted protective order. ... Yet there is in this case ... a First Amendment interest, which the discovery sought by the plaintiffs would impair.... In NAACP v. Alabama, 357 U.S. 449, 78 S.Ct. 1163, 2 L.Ed.2d 1488 (1958), a case involving resistance to pretrial discovery of membership lists, the Supreme Court recognized a First Amendment right of association for the purpose of expressing ideas. The American Academy of Orthopaedic Surgeons is not the NAACP, but neither is it a country club or a trade association; it is a professional association and a forum for exchanges of information about surgical techniques and related matters of substantial public interest. ... The Constitution to one side, one does not have to be a student of Aristotle and de Tocqueville to know that voluntary associations are important to many people, ... and that

Page 11 of 201

voluntary professional associations are important to American professionals (the premise of the plaintiffs' antitrust suit, as it was of their Illinois suits). Since an association would not be genuinely voluntary if the members were not allowed to consider applications for new members in confidence, the involuntary disclosure of deliberations on membership applications cannot but undermine the voluntary character of an association and therefore harm worthy interests, whether or not those interests derive any additional dignity from the First Amendment. The threat to such interests is more than speculative in this case. Dr. Marrese’s counsel said at the rehearing en banc that he wants to use the membership files as a source of names of Academy members to depose in an effort to find out the motives behind their opposition to his client’s application. It is hard to believe that after members of the Academy find themselves deposed for this purpose they will still be willing to offer candid evaluations of prospective members. The other side of the coin is that barring the plaintiffs or their counsel from all access to the membership files would probably make it impossible for them to prove their antitrust case. But there were various devices that the district judge could have used to reconcile the parties’ competing needs. For example, he could have examined the membership files himself in camera, a procedure described by the [U.S.] Supreme Court in a related context as “a relatively costless and eminently worthwhile method to insure that the balance between petitioners' claims of irrelevance and privilege and plaintiffs' asserted need for the documents is correctly struck.” We are told the membership files may be voluminous. No doubt the files in all cases between 1970 and 1980 where applications for membership in the Academy were refused are voluminous, but the place to start an in camera examination would be with the files on Drs. Marrese and Treister. If the judge found no evidence in those files of any anticompetitive purpose attributable to the Academy, he would not have to look at any other files. This is not a class action; the plaintiffs are not suing as the representatives of other orthopaedic surgeons who have been denied membership in the Academy. Better yet, the judge might have ... followed the procedure discussed in this court's recent decision in [citation omitted]. There we ordered the files of faculty tenure deliberations edited (“redacted”) to remove the names of the deliberating faculty members and any other information that might enable them to be identified, and we directed that on remand the redaction be reviewed in camera by the district judge, who would have the originals before him to compare with (and thereby assure the accuracy of) the redactions. Had the same procedure been followed here, the plaintiffs’ counsel would have been able to read the files personally. If the files had turned out to contain evidence or leads to evidence of anticompetitive conduct, the plaintiffs' counsel could then have requested the judge to order names revealed to counsel so that the relevant individuals could be deposed. We do not think that only universities should be entitled to such consideration. The protective order that the judge did enter (“which draws on each party’s submission but parallels neither,” in his words) was not well designed to protect the privacy of the Academy’s members. It not only allowed the plaintiffs themselves—two disappointed applicants for membership—to read the files on their own applications; it allowed the plaintiffs’ counsel “to discuss with plaintiffs the general contents” of all of the other files and to depose anyone whose

Page 12 of 201

name they found in the files. The order was not calculated to allay the Academy’s justifiable anxiety for the confidentiality of its membership deliberations. Rule 26(d) (control of the sequence and timing of discovery) provided another method of accommodating the competing interests here with minimal damage to either. If there is other discovery that a plaintiff must complete ..., the district judge has the power under Rule 26(d) to require the plaintiff to complete the other, nonsensitive discovery first. And in an appropriate case he has the duty [to do so]. “As a threshold matter, the court should be satisfied that a claim is not frivolous, a pretense for using discovery powers in a fishing expedition. In this case, plaintiff should show that it can establish jury issues on the essential elements of its case not the subject of the contested discovery.” Of course, if the plaintiffs do not need anything beyond the contents of the Academy’s membership files to prove their case, they cannot be asked to do any other discovery before getting access to the files. ... Assuming discovery would not be at an end when the files were turned over and any leads contained in them were tracked down, Rule 26(d) could have been used to schedule the sensitive discovery last. We do not hold that all files of all voluntary associations are sacrosanct; we do not even hold that the membership files of an association of medical professionals are sacrosanct. They are discoverable in appropriate circumstances, subject to appropriate safeguards. But we may not ignore as judges what we know as lawyers—that discovery of sensitive documents is sometimes sought not to gather evidence that will help the party seeking discovery to prevail on the merits of his case but to coerce his opponent to settle regardless of the merits rather than have to produce the documents. In a survey of Chicago lawyers, ... “[u]nnecessary intrusions into the privacy of the individual, high costs to the litigants, and correspondingly unfair use of the discovery process as a lever toward settlement have come to be part of some lawyers' trial strategy.” ... There is at least a hint of predatory discovery in this case in the ... determination expressed by Dr. Marrese’s counsel to use the Academy’s membership files as the basis for deposing the individuals who voted against his client’s membership application. There are so many ways in which Judge Shadur could have prevented the plaintiffs from abusing the discovery process, without denying them any information essential to developing their case, that we are left with the firm conviction that the discovery order he issued, when he issued it, was erroneous. Our conclusion is consistent with the evolving concept of the district judge’s managerial responsibility in complex litigation. ... [A]mended Fed.R.Civ.P. 26(b)(1), which expands that responsibility.... [T]he Advisory Committee’s Note indicates that the purpose of the amended rule is in part to remind federal district judges of their broad powers—and, we believe, correlative responsibilities—under Rule 26. This case illustrates the pathological delays that are all too frequent in modern litigation. After nearly eight years of state and federal litigation, the case remains stalled in the earliest stages of discovery. It has gone on long enough. ... [T]he contempt judgment [against the Academy] is reversed with directions to dismiss the contempt proceeding. ... [T]he order denying

Page 13 of 201

the defendant’s motion to dismiss the underlying suit is reversed with directions to grant the motion and dismiss the complaint with prejudice. . . . HARLINGTON WOOD, Jr., Circuit Judge, with whom CUMMINGS, Chief Judge, and CUDAHY, Circuit Judge, join, dissenting. . . . Judge Posner’s opinion now finds fault in the district court’s failure to incorporate other protective devices for resolving the discovery dispute, such as an in camera inspection of the Academy’s files or production of a redacted version of the files. I, too, believe that the trial judge could have improved on his discovery order. First, he could have been well-served by taking a look in camera at the Academy files on plaintiffs to see whether the files contained what plaintiffs claimed to need so badly, and whether the Academy had good reason to fight so desperately to keep the files out of sight. The Supreme Court has commended an in camera view of documents in a discovery dispute to insure the striking of a proper balance between the interests in confidentiality and disclosure. Failure to make an in camera inspection, however, is not in itself an abuse of discretion. While the district court did not view the Academy’s files, it apparently was aware that the state trial court had conducted an in camera inspection of the files in the earlier state court

litigation between the same parties. After viewing the files, the state court ordered production over the Academy's objections. Thus, one judge had viewed these materials and determined that the contents were relevant and disclosure was appropriate. We should not ignore the state court’s first-hand determination. ... The propriety of the district court’s order to produce the unredacted files also must be considered in light of the surrounding circumstances. In the early stages of this litigation, plaintiffs expressed their willingness to accept a redacted version of the Academy’s files, at least as the first phase of discovery. The Academy refused plaintiffs’ early offer to enter a redaction agreement, and plaintiffs later rescinded the offer. Both sides submitted proposed protective orders to the district court; apparently neither provided for redaction. ... The Academy steadfastly maintained that no modification of the district court’s protective order would be acceptable to it, and any forced disclosure of confidential information prior to the establishment of a jury issue on antitrust injury would be an abuse of discretion. Although the Academy’s stonewalling now has paid off [due to the majority’s reversal of the contempt order], I do not find an abuse of discretion in the district court’s failure to order redaction under these circumstances. Judge Posner’s opinion suggests that the district court should have used its Rule 26(d) powers to control the sequence of discovery in this case. Discovery usually may proceed in any sequence, but the court upon motion, for the convenience of parties and in the interests of justice, may schedule the order of discovery on different issues. ... The district court considered and rejected the Academy’s motion to bifurcate discovery. The court was satisfied that plaintiffs’ claim was not frivolous, having withstood a motion to dismiss once, and again upon

Page 14 of 201

{ "pageset": "Se9

reconsideration. The Academy’s proposal for sequential discovery would have required piecemeal discovery, which the district court found would burden plaintiffs unnecessarily since the Academy’s confidentiality interests could be preserved adequately through a protective order.

I would hold that the district court did not abuse its discretion by refusing to order sequential discovery. Judge Posner's opinion discusses the misuse of discovery tools to coerce settlement, and apparently concludes that the district court’s discovery order failed to prevent plaintiffs from abusing the discovery process. The opinion finds two “hints” of predatory discovery here: first, that plaintiffs sought access to federal court—and its liberal discovery rules—only after losing in the state court; and further, that plaintiffs planned to use information from the Academy’s files as the basis for further discovery. [But] ... plaintiffs’ plan to follow up leads found in the files, is one of the conventional purposes of discovery.

Upon questioning at oral argument, counsel for the Academy labeled plaintiffs’ suit a “fishing expedition,” an attempt to gain access to otherwise unavailable information. Under the circumstances, however, plaintiffs’ pursuit of the files and plan to seek further discovery using leads from the files were within the bounds of appropriate discovery. The discovery record in this case evidences not the slightest abuse, harassment, or coercion to pressure a settlement. Judicial concern about discovery abuse is always legitimate, but such arguments are gratuitous in the context of this case. ... Although not condemning any one [judicial] omission as an abuse of discretion, the discovery majority is left with the “firm conviction” that the district court’s discovery order was erroneous. I am not. The district court sought and received proposed protective orders from the parties, and mediated negotiations on this issue. Bifurcation of discovery was not mandatory in this case, and the court reasonably provided for the Academy’s confidentiality concerns through the protective order. The Academy should not now reap a windfall from reversal of the discovery order because the order did not incorporate certain provisions that the Academy still would refuse to accept. The Academy treated the trial judge’s reasonable discovery order with contempt and its contempt should be recognized by this court. . . . ..................................................................... Although the discovery order could have been improved, the district court’s fashioning of the terms was not an abuse of discretion under the circumstances of this case. What the merits of this case would have turned out to be, we now will never know; but we must not let a[n inappropriate] prejudgment on the merits cloud our review of the discovery order. Plaintiffs ... deserve[d] the opportunity within reasonable limits to develop their case, and then the opportunity to try it before a judge and jury. I would affirm the district court’s contempt holding, but on remand I would direct the court to view the Academy’s files in camera and to consider possible redaction before actually enforcing the discovery order. This opportunity to reconsider the discovery order would be a fairer disposition of this case, giving the Academy another chance to review its position on discovery without depriving plaintiffs of their chance to see if they can make out a case.

Page 15 of 201

Judge Posner’s opinion reaches the discovery issue despite its conclusion that the suit should be dismissed on res judicata grounds [edited out of this opinion, and the basis for the ensuing U.S. Supreme Court reversal]. The opinion directs that plaintiffs’ complaint be dismissed with prejudice. That is a hard blow to strike, ... and I respectfully dissent on the discovery and contempt issue.

CUDAHY, Circuit Judge, with whom CUMMINGS, Chief Judge, and HARLINGTON WOOD, Jr., Circuit Judge, join, dissenting [on res judicata grounds omitted]. ............................................. . . .

Page 16 of 201

BLACK HORSE LANE ASSOC., L.P. v. DOW CHEMICAL CORP.United States Court of Appeals, Third Circuit

228 F.3d 275 (2000)

Professor’s Note: The purchaser of environmentally distressed property sued the seller for breach of contract, breach of implied covenant of good faith and fair dealing. It sought monetary and injunctive relief under Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and New Jersey Spill Compensation and Control Act. Mr. Berger was the president of an entity plaintiff, and the deponent who appeared on its behalf.

This case opinion will provide useful insight into deposition practice. Several editorial enhancements have been made in this edited version of the case, without indicating the deviance from the original text.

Court’s Opinion: Greenberg, Circuit Judge [delivered the unanimous opinion of the court].

II. FACTS AND PROCEEDINGS

. . .Appellants [plaintiffs] designated Berger as their Fed.R.Civ.P . 30(b)(6) witness to testify on behalf of USLR, USRR and Black Horse. On October 2, 1998, appellees’ counsel began to depose Berger, but counsel was not able to obtain a date to reconvene the deposition. As a result of counsels’ inability to agree on the date that Berger’s deposition should resume, appellees’ counsel sought an order from the magistrate judge overseeing discovery to set the date for the resumption of the deposition. After a teleconference with the parties …, the magistrate judge signed an order …, which provided the following:

IT IS on this 9th day of October, 1998, ORDERED, as follows:

Lawrence S. Berger, as Plaintiffs’ Fed.R.Civ.P. 30(b)(6) designated witness and fact witness, shall appear for oral deposition commencing on Tuesday, October 13, 1998, at 10:00 a.m. and continuing from day to day thereafter until completed.

Notwithstanding the court’s directive, when appellees’ counsel appeared at Berger’s law office to continue his deposition on October 13, 1998, Berger failed to appear and his counsel, Paul Schafhauser, was “in trial” and not in the office. At that point, appellees’ counsel again sought the court’s intervention.

… [T]he magistrate judge signed and entered an order which directed that Berger’s deposition recommence on Monday, October 19, 1998, at 10:00 a.m. The order also provided that “[a]s a sanction for failure by Lawrence Berger to appear for

Page 17 of 201

depositions on Tuesday, October 13, Plaintiffs shall promptly pay the fees and costs of counsel fees for defendants (a) for appearing at Mr. Berger’s non-deposition on October 13, and (b) for bringing this application and appearance today.” While Berger [finally] appeared for his deposition at the designated date and time, appellees claim that he provided evasive and non-responsive answers to many of counsel’s questions relating to the negotiation and execution of the Agreement, and appellants’ damages allegations. ………………………………………………………………………… . . .

III. DISCUSSION

. . .Moreover, it is relevant to our analysis that Berger’s deposition testimony, as

appellants’ designated Rule 30(b)(6) witness, is far from illuminating on the necessary costs of response issue. Contrary to the spirit of Rule 30(b)(6), Berger’s evasive answers provide us with little assistance.... We only need cite the following colloquy between Essex’s counsel and Berger, which occurred at his deposition, to illustrate our point:

Q: ... Mr. Berger, have you ever seen those bills before?A. I have no idea.

Q. Well, then look through them.A. I could look through them for the next five hours and I would have no idea. We’ve 90

properties. I get bills from people. There are bills going into 1997 and before. I have no idea whether I have ever seen these bills or any other bills you might put in front of me today.

Q. Mr. Berger, other than the charges represented in those bills, are there any other costs that have been expended by any plaintiff for any environmental consulting or removal or remediation with respect to the Black Horse Lane property?

A. I have no idea.Q. Do you know a man named Mr. Irving Cohen?

A. Yes.Q. How long have you known him?

A. I would say about ten years.Q. And in what capacity do you know him?

A. Mr. Cohen was the president of Enviro Sciences. It’s an environmental consulting firm. Q. Has that firm ever been used by [appellant] Black Horse Lane Associates?

A. I have no idea.Q. Looking through the exhibits, if you could, could you tell me whether those bills appear to

indicate

Page 18 of 201

that such was the case?

A. … I can’t tell you anything about these bills. All I’m doing is reading from the bills for you.

Q. Turn to the bills that talk about Black Horse Lane, Phase One, I believe.A. There’s a bill dated 10-16-97 that says ‘Phase One, Black Horse

Lane.’ Q. Q. All right. To what does that bill refer?A. I don’t understand the question.

Q. What does Phase One, Black Horse Lane refer to?A. I have no idea.

Q. Did you ever order a Phase One on Black Horse Lane?A. I have no idea.

Q. Do you have an understanding what the phrase ‘Phase One’ means?A.

Yes, I do. Q. What is that?

A. It’s a preliminary environmental report which basically points out areas of potential environmental concern. . . . Q. Do you have any idea why Black Horse Lane would have ordered a Phase One at or about the time period for which the bill is indicated? A. Sitting here today, I have no idea why we did or didn’t. I suspect if we did, in fact, order one a year ago, at that point I had a reason for it, but I don’t know what that reason would be sitting here today. If, in fact, we did order a Phase One. I don’t recall that either.

Our review of the remainder of Berger’s deposition testimony regarding the nature of ESI’s consulting work for appellants confirms that he failed to offer any useful information concerning the factual basis for appellants’ CERCLA response cost claim relating to the fees paid for ESI’s services.

B. District Court’s Final Order of December 16, 1999

Appellants next contend that the district court erred in affirming the magistrate judge’s letter opinion and order entered June 30, 1999, which granted appellees’ motion for discovery sanctions against appellants pursuant to Rule 37(b) and (d). As we previously mentioned, the magistrate judge agreed with appellees’ argument that Berger’s conduct warranted a sanction in the form of precluding appellants from asserting a position and introducing evidence contrary to the position Berger asserted

Page 19 of 201

during his deposition. In addition, the magistrate judge concluded that Berger’s lack of preparedness at his deposition justified the imposition of monetary sanctions pursuant to Rule 37(d) in the form of costs and attorney’s fees associated with taking the deposition and bringing the sanctions motion before the court….

Here, Berger was not completely prepared on any occasion for which he sat for a deposition. Further, his lack of preparation cannot be a mere oversight but is, instead, a clear demonstration of bad faith. This is obvious from Berger’s repeated denial of any knowledge of his status as a 30(b)(6) witness despite being present at the deposition and being asked each and every time he appeared if he had knowledge of his status. Further, Berger …even denied knowledge of documents which he himself had signed, claiming that he had no recollection of such documents despite acknowledging that he normally did not sign anything that he did not read first. These infractions would not be so detrimental if Berger were no so consistent with his apparent incompetence and lack of cooperation. Had he taken the time to prepare in the slightest as Rule 30(b)(6) requires, he might have been fully prepared for at least one deposition. Additionally, Berger’s actions are magnified by his status as a member of the Bar. In affirming the magistrate judge’s order, the district court provided its reasons on the record:

I read the record. It is appalling. It is appalling.[Berger] did nothing except show his face only under the threat of

court orders. When he showed up, he knew he was a 30(b)(6) witness and, notwithstanding the fact that he knew he was a 30(b)(6) witness, he refused to answer questions in an intelligent way. He refused to prepare, as you are required to prepare under 30(b)(6), to intelligently answer questions and just literally thumbed his nose at the defendants and, frankly, at the Court.

. . . I’m satisfied, based upon my review of the record-and I defy anyone to look at the record here which was created by Mr. Berger—that the actions taken by [the magistrate judge] were well within his discretion and do not constitute either an abuse of discretion or are they contrary to law or shocking to the conscience of the Court. One, in order to come to that conclusion, one must live in the shoes of [the magistrate judge] in trying to conduct orderly discovery in this matter.

One must review meticulously the record of noncompliance by Mr. Berger in this matter. [The magistrate judge] did not issue this opinion lightly. [The magistrate judge] was fully cognizant of the totality of the facts surrounding this matter, which border upon almost conscious disregard of the Court and the court rules….

Page 20 of 201

Appellants make two arguments in support of their request to vacate the monetary sanctions order. … They … claim that pursuant to Rule 37(d), “a party making a motion based upon an alleged violation of Rule 37(d) must certify that the movant has in good faith conferred or attempted to confer with the party failing to answer or respond in an effort to obtain such answer or response without court action,” but that there was no such “good faith” effort by appellees to resolve the dispute without court action.

Finally, they rely on the fact that Rule 37(d) states that sanctions may be imposed when a party, inter alia, “fails … to appear before the officer who is to take the deposition, after being served with a proper notice.” Here, they argue that we should apply the “fails to appear” language literally, and that sanctions were inappropriate in this case because Berger appeared for his deposition after the magistrate judge’s October 15, 1998 order and “testified under oath for more than seventeen hours.” … Their second argument is based on their interpretation of Berger’s behavior during his deposition. They claim that even if we agree with the magistrate judge’s finding that Rule 37(d) could support the imposition of sanctions when a Rule 30(b)(6) witness provides inadequate and evasive answers, the record demonstrates that Berger’s deposition did not present a situation warranting sanctions. They claim that “[a] fair examination of the transcript of Mr. Berger’s 570-page deposition confirms that Mr. Berger testified fully and in good faith in response to Defendants’ questioning.” In any event, they maintain that “any ‘violation’ of Rule 30(b)(6) which might be said to have existed was minimal, and indeed, paled in comparison with the extraordinarily broad discovery obtained by Defendants in this matter.”

We are not persuaded by either contention.. . .

The deposition of a corporation, however, poses a different problem, as reflected by Rule 30(b)(6). Rule 30(b)(6) streamlines the discovery process. It places the burden of identifying responsive witnesses for a corporation on the corporation. Obviously, this presents a potential for abuse which is not extant where the party noticing the deposition specifies the deponent [by the individual’s name]. When a corporation or association designates a person to testify on its behalf, the corporation appears vicariously through that agent. If that agent is not knowledgeable about relevant facts, and the principal has failed to designate an available, knowledgeable, and readily identifiable witness, then the appearance is, for all practical purposes, no appearance at all.

… The district court did not abuse its discretion in awarding fees and costs under Rule 37(d).

. . . We reject appellants’ final contention that Berger’s responses during his deposition did not support the district court’s finding that he failed to cooperate with appellees’ attorneys, and

Page 21 of 201

that his conduct was tantamount to a failure to appear that warranted sanctions under Rule 37(d). To the contrary, our review of Berger’s deposition testimony in its entirety confirms the observations of both the magistrate judge and the district court on this point. Indeed, throughout his lengthy deposition, Berger failed to offer meaningful testimony about most, if not all, of the items specified in the notice of deposition. While we need not recite every instance in which Berger’s testimony was incomplete and unhelpful on the specified topics, we believe that two examples of his uncooperative attitude and his flagrant disregard for his obligation as a Rule 30(b)(6) witness amply illustrate our point. . . . …..….……………………………..…………………..…….. Obviously, as appellants’ Rule 30(b)(6) witness, Berger should have been prepared to discuss these and other topics designated in the notice of deposition. Instead, he divulged as little information as possible in every area that appellees identified. Moreover, Berger’s uncooperative attitude is demonstrated further by statements in which he claimed that he was unaware that he was appellants' designated Rule 30(b)(6) representative, did not know what the phrase “Rule 30(b)(6) representative” meant, and was not familiar with Rule 30(b)(6) or what it required him to do. He also admitted at one point that he did not recall whether he reviewed the notice of deposition prior to the date of the deposition, and later stated clearly that he had not bothered to read it at all. Simply put, we find his professed ignorance on these points particularly unconvincing given that he obtained undergraduate and law degrees from prestigious universities and has been licensed to practice law since “either [19]65 or [19]66.” In any event, we believe that the magistrate judge’s finding that Berger engaged in discovery abuses plainly is justified on this record. The magistrate judge had ample evidence of Berger’s failure to cooperate, which in turn rendered his deposition a virtual non-event. Accordingly, we will affirm the monetary sanctions ordered pursuant to Rule 37(d). ……………………………………………….. IV. CONCLUSION ……………………………………………………………

For the foregoing reasons, the district court’s orders … will be affirmed.

Notes and Questions:………………………………………… 1. The facts include that Mr. Berger testified under oath for more than seventeen hours—resulting in a 570-page deposition transcript. A subsequent Rules amendment provides for a presumptive limit of a one day deposition, listing no more than seven hours. Berger would no doubt not deserve the benefit of that amended Rule default limitation. ………………………………………………………………………. 2. When an adversary schedules the deposition of an entity, who normally decides what person within the entity will appear—the lawyer scheduling the deposition, or the entity? See FRCP 30(b)(6). Does that default presumption make sense? At the close of such a deposition, what question might you ask the entity’s representative?

Page 22 of 201

O’CONNOR v. BOEING NORTH AMERICAN, INC.United States District Court, Central District California

185 F.R.D. 272 (1999)

Chapman, United States Magistrate Judge.

… [P]laintiffs filed a notice of motion and motion to compel further responses to interrogatories regarding the manner of production of documents…. The defendants filed … [a] declaration … in opposition to plaintiffs’ motion to compel….

… [D]efendants filed a notice of motion and motion to compel answers to interrogatories and production of documents by plaintiffs … in support of defendants motion. The plaintiffs filed the declarations … in support of plaintiffs’ opposition to defendants’ motion to compel................................................................. . . . .................................................................... BACKGROUND

… District Judge Audrey B. Collins certified this action as a class action…. Additionally, this action includes personal injury and wrongful death claims brought by 71 plaintiffs.

… In the Fourth Amended Complaint (“FAC”), plaintiffs allege that, beginning in approximately 1946, the defendants researched, developed, manufactured and tested various missile and rocket engines, as well as propellants, lasers and nuclear reactors at four facilities located in the greater Simi Valley and San Fernando Valley. Those four facilities, referred to as the “Rocketdyne Facilities,” were located at the following sites: The Santa Susana Field Laboratory (“SSFL”) in Ventura County, the Canoga Facility at 6633 Canoga Avenue, the DeSoto Facility at 8900 DeSoto Avenue, and the Hughes Facility at 8433 Fallbrook Avenue.

The plaintiffs allege that the activities of the defendants at the Rocketdyne Facilities involved the use and release of certain chemicals, including, among others, trichloroethene (TCE) and hexavalent chromium, as well as the use, storage, generation and disposal of certain radioactive materials. The plaintiffs allege that they were personally exposed to and/or that their properties were contaminated by certain radioactive and/or chemical substances which were released from one or more of the Rocketdyne Facilities and which were dispersed through the contamination area by means of air currents, surface water runoff and/or subsurface ground water.

The plaintiffs further allege that their exposure to these substances has placed them at an increased risk of developing cancer or some other serious illness or disease. As a result, plaintiffs seek the implementation of a court-supervised program of medical monitoring designed to detect early signs of such illness or disease.

Page 23 of 201

The plaintiffs also allege that the defendants’ release of these substances has resulted in the contamination of their properties and has diminished the value of their properties, and they have incurred certain necessary expenses in response to the contamination of their properties for which they seek reimbursement under federal law.

The defendants maintain that plaintiffs have not been exposed to any substances released from the Rocketdyne Facilities that place them at an increased risk of illness or disease. The defendants also maintain that plaintiffs’ properties are not contaminated by any releases from the Rocketdyne Facilities and that, consequently, plaintiffs are not entitled to recover damages for any harm caused to their properties.

DISCUSSION

Plaintiffs’ Motion to Compel

I

The plaintiffs served interrogatory nos. 1 through 20 on defendants….3 The defendants filed multiple objections, including relevancy and definitional objections to the interrogatories; however, without waiving their objections, defendants generally responded to the interrogatories under Rule 33(d), stating that the answers to these interrogatories may be derived or ascertained from defendants’ business records previously produced to plaintiffs.4 The plaintiffs argue that defendants’ responses are improper in that defendants have not complied with Rule 33(d), and, when answering narratively, have not completely and responsively answered.5

................................................................ . . . ....................................................................The nature of the inquiries made by plaintiffs in their interrogatories was sufficiently

broad for defendants to answer under Rule 33(d).6 See [citation omitted] (One “prerequisite for invoking the Rule 33[(d)] option is that there be a burden on the interrogated party if it were

3 3 These interrogatories generally seek information regarding the identities, quantities, and time periods of hazardous substances used and released at each of defendants' facilities, as well as the locations, dates and results of offsite testing of hazardous substances. Additionally, plaintiffs seek information identifying the locations, nature of, and results from tests on substances in the surrounding area, groundwater, surface water, air, and soil. ……………4 4 The defendants have filed three sets of responses to plaintiffs, interrogatories: their original responses served on February 5, 1998; “Further Responses” served on June 1, 1998; and “Supplemental Further Responses” served on December 22, 1998.5 5 The plaintiffs … have characterized the instant dispute as raising five issues: (1) May defendants respond to interrogatories by referring to a few selected documents produced by them; (2) may defendants refuse to indicate where in the documents produced answers to the interrogatories may be found or must they provide substantive answers to the interrogatories; (3) must defendants provide plaintiffs with a locator and descriptive information to identify documents responsive to specific inquiries; (4) must defendants produce documents in any particular order when producing large volumes of documents; and (5) must a privilege log contain a description of withheld documents (including attachments), as well as the job titles of all authors and recipients sufficient to allow plaintiffs to contest claimed privileges. The Court, however, does not understand issue no. 4 or to what “order” the plaintiffs are alluding.………………………… ……………………………………………………………………………….6 6 Federal Rule of Civil Procedure 33(d) provides [comparably worded in a subsequent amendment]:

Page 24 of 201

required to answer the interrogatories in the traditional manner”). However, Rule 33(d) is not satisfied by the wholesale dumping of documents. Rather, under Rule 33(d), the responding party chooses to produce business records in answer to the interrogatories—not to avoid answering them. To answer an interrogatory [in this manner], “a responding party has the duty to specify, by category and location, the records from which answers to interrogatories can be derived.”7 Thus, when voluminous documents are produced under Rule 33(d), they must be accompanied by indices designed to guide the searcher to the documents responsive to the interrogatories. See [citation omitted] (“The appropriate answer when documents are to be used [under Rule 33(d) ] is to list the specific document provided the other party and indicat[e] the page or paragraphs that are responsive to the interrogatory”).

Without detailed specification by category and location of responsive documents, the burden of deriving the answers to the interrogatories is not the same for the parties; rather, it would be easier for persons employed by the defendants to locate responsive documents. See Advisory Committee’s Note to Fed.R.Civ.P. 33 ... (“A respondent may not impose on an interrogating party a mass of records as to which research is feasible only for one familiar with the records.”).… Thus, defendants’ responses to interrogatory nos. 1 through 17 and 19 do not comply with Rule 33(d) and [fail to] adequately specify by category and location the business records containing the answers to the interrogatories, and plaintiffs’ motion should be GRANTED as to these interrogatories.

Interrogatory no. 18 asks defendants to:

IDENTIFY the date and location of your first discovery of CONTAMINATION in the SURROUNDING AREA.

The defendants, in their Supplemental Further Responses to interrogatory no. 18, state that: BNA first became aware that releases from its SSFL operations in concentrations above normal background had migrated offsite in August or September 1991. Water from a monitoring

Where the answer to an interrogatory may be derived or ascertained from the business records of the party upon whom the interrogatory has been served..., and the burden of deriving or ascertaining the answer is substantially the same for the party serving the interrogatory as for the party served, it is a sufficient answer to such interrogatory to specify the records from which the answer may be derived or ascertained and to afford to the party serving the interrogatory reasonable opportunity to examine, audit or inspect such records and to make copies, compilations, abstracts, or summaries. A specification shall be in sufficient detail to permit the interrogating party to locate and to identify, as readily as can the party served, the records from which the answer may be ascertained.

7 7 The defendants, in response to interrogatory nos. 1 through 5, responded that, because the volume of responsive documents is “huge, and listing all the responsive documents would be an overly burdensome endeavor,” defendants have identified only a “representative sampling” of some of the documents containing responsive information. Such a response clearly shows lack of compliance with Rule 33(d). …………………………………….

Page 25 of 201

well approximately one hundred feet north of SSFL on property then owned by the Brandeis–Bardin Institute measured above background for tritium, but below the drinking water standard.

The plaintiffs object that this response is inadequate under Rule 33(d) and that defendants have provided no information with regard to the [other three] Hughes, Canoga or DeSoto facilities [italics added]. However, defendants have narratively answered the interrogatory, rather than rely on Rule 33(d). Additionally, interrogatory no. 18 only requests information regarding defendants’ first discovery of contamination, not the first discovery of contamination in the surrounding areas of each of the Rocketdyne Facilities; thus, defendants answered the interrogatory.

Interrogatory no. 20 asks defendants to:

IDENTIFY all allegations, reports, or claims of OFFSITE CONTAMINATION YOU have received.

In their Supplemental Further Responses to interrogatory no. 20, defendants list sixteen lawsuits, including the instant action, and further responded that they “are not aware of specific complaints of contamination of offsite property other than these lawsuits.”

The plaintiffs object that this response is inadequate under Rule 33(d), that defendants have provided no information regarding the Hughes, Canoga or DeSoto facilities, and that the response should also list informal complaints. Here again, defendants have narratively answered the interrogatory, rather than rely on Rule 33(d), and defendants have answered the interrogatory, albeit not to plaintiffs’ satisfaction.

For the foregoing reasons, the Court finds that defendants have not complied with Rule 33(d) in responding to interrogatory nos. 1 through 17 and 19, and plaintiffs’ motion to compel further responses to those interrogatories is GRANTED. The Court also finds that defendants’ responses to interrogatory nos. 1 through 17 and 19 were not substantially justified. Since the Court has found that, in light of the nature of the interrogatories, defendants could have chosen to respond under Rule 33(d), the defendants, at their option, will be afforded one last opportunity to respond under Rule 33(d), provided they comply with all of the Court’s requirements and limitations set forth herein and in Parts II and V [of this opinion]. The plaintiffs’ motion to compel further answers to interrogatory nos. 18 and 20 is DENIED.

II

The Court would like to take this opportunity to provide guidance to the parties regarding the use of Rule 33(d), so that, when properly used, both sides will be able to easily find for trial

Page 26 of 201

the documents produced during discovery. For trial purposes, it is best to have all documents placed on CD–ROM, which affords a method by which the storage of voluminous documents is less burdensome to the parties. This is not possible, however, without two things: One, a general index describing by topic and subtopic the information in the documents and, two, a locator index identifying the location of each document on CD–ROM. Since the Fourth Amended Complaint spans five decades, the descriptive index should also provide the decade (date) in which the document was created. Because both the descriptive and locator indices must meet the needs of both sides, the Court believes the parties should jointly create these indices. Thus, the parties must meet and confer regarding the indices, and such meeting or meetings shall take place no later than fourteen (14) days from the date of this Order.

. . .

V

. . .

To prevent the waste of the Court’s time in the future, the Court intends to impose certain conditions on the parties. First, each side shall, within the next fourteen (14) days, identify to the Court one attorney who will be primarily responsible for discovery, and that attorney must make himself or herself available at all times to review discovery decisions by the other attorneys and to personally meet and confer with the opposing discovery attorney to resolve any discovery dispute, within 72 hours of a dispute arising. Second, each side shall, within the next fourteen (14) days, submit to the Court for its consideration and adoption a discovery plan containing suggestions about ways in which the discovery process may proceed more smoothly, efficiently and economically. Third, commencing May 3, 1999, and continuing on the first Monday of each month thereafter, until discovery is completed, the sides shall submit to the Court a joint status report specifying the discovery conducted, including the making of supplemental answers and document productions, during the past thirty (30) days, or a declaration signed by both discovery attorneys that there is nothing to report.

The Court would like to take this opportunity to address the parties and their counsel, to stress that [t]he discovery system depends absolutely on good faith and common sense from counsel. The courts, sorely pressed by demands to try cases promptly and to rule thoughtfully on potentially case dispositive motions, simply do not have the resources to police closely the operation of the discovery process. The whole system of [c]ivil adjudication would be ground to a virtual halt if the courts were forced to intervene in even a modest percentage of discovery transactions. That fact should impose on counsel an acute sense of responsibility about how they handle discovery matters. They should strive to be cooperative, practical and sensible, and should turn to the courts (or take positions that force others to turn to the courts) only in extraordinary situations that implicate truly significant interests.

ORDER

Page 27 of 201

1. The plaintiffs’ motion to compel further responses to interrogatory nos. 1 through 17 and 19 is GRANTED, and defendants shall file supplemental answers to those interrogatories within forty-five (45) days of the date of this Order, or alternatively, defendants may elect to answer the interrogatories under Rule 33(d), provided defendants comply with all of the requirements set forth in Parts I, II and V; however, plaintiffs’ motion to compel further responses to interrogatory nos. 18 and 20 is DENIED.

2. The plaintiffs’ motion for attorney's fees is DENIED WITHOUT PREJUDICE. The defendants’ request for attorney’s fees is DENIED.

. . .

4. Within fourteen (14) days of the date of this Order, each side shall select its discovery attorney and shall submit a discovery plan to Judge Chapman, as discussed in Part V. The discovery attorneys shall, starting May 3, 1999, submit joint month status reports to Judge Chapman advising of all discovery, including the making of supplemental responses and productions, occurring during the previous thirty (30) days, as set forth in Part V.

5. The Clerk of Court shall serve this Order on the parties.

Notes and Questions:

1. O’Connor introduces you to the intricacies of modern discovery practice; e.g., the court’s early suggestion that Rule 30(b)(6) depositions would likely be the more appropriate device for seeking such complex information. Note the breadth of discretion the court may exercise, when resolving discovery matters—especially at the beginning of Part V.

2. As long as what is being asked for lies within the scope of discoverable information, the response does not have to be in lockstep with the method employed to seek it. Thus, the FRCP 33 interrogatory rule authorizes a response via production of/providing access to documents which will answer the interrogatory.

3. The court directed the parties to “meet and confer” regarding preparation of the indices. Parties also have a responsibility to meet and confer, each time one of them makes a motion to the court. FRCP 37(a)(1). A host of factors influence the method by which moving parties must meet this obligation. They do not have to actually “meet.” Another factor is that the more complex the case, the more robust the court’s expectation regarding the “confer” portion of this requirement.

4. The court will grant attorney’s fees, depending on its view of the genuineness of the dispute.

Page 28 of 201

Page 29 of 201

ZUBULAKE v. UBS WARBURG LLCUnited States District Court, Southern District New York

217 F.R.D. 309 (2003)

OPINION AND ORDER

Scheindlin, District Judge.

The world was a far different place in 1849, when Henry David Thoreau opined (in an admittedly broader context) that “[t]he process of discovery is very simple.” That hopeful maxim has given way to rapid technological advances, requiring new solutions to old problems. The issue presented here is one such problem, recast in light of current technology: To what extent is inaccessible electronic data discoverable, and who should pay for its production?

I. INTRODUCTION

The Supreme Court recently reiterated that our “simplified notice pleading standard relies on liberal discovery rules and summary judgment motions to define disputed facts and issues and to dispose of unmeritorious claims.” Thus, it is now beyond dispute that “[b]road discovery is a cornerstone of the litigation process contemplated by the Federal Rules of Civil Procedure.” The Rules contemplate a minimal burden to bringing a claim; that claim is then fleshed out through vigorous and expansive discovery.

In one context, however, the reliance on broad discovery has hit a roadblock. As individuals and corporations increasingly do business electronically5—using computers to create and store documents, make deals, and exchange e-mails—the universe of discoverable material has expanded exponentially. The more information there is to discover, the more expensive it is to discover all the relevant information until, in the end, “discovery is not just about uncovering the truth, but also about how much of the truth the parties can afford to disinter.”

This case provides a textbook example of the difficulty of balancing the competing needs of broad discovery and manageable costs. Laura Zubulake is suing UBS Warburg LLC, UBS Warburg, and UBS AG (collectively, “UBS” or the “Firm”) under Federal, State and City law for gender discrimination and illegal retaliation. Zubulake’s case is certainly not frivolous8 and if she prevails, her damages may be substantial.9 She contends that key evidence is located in various e-mails exchanged among UBS employees that now exist only on backup tapes and perhaps

5 5 See Wendy R. Liebowitz, Digital Discovery Starts to Work, Nat'l L.J., Nov. 4, 2002, at 4 (reporting that in 1999, ninety-three percent of all information generated was in digital form).8 8 Indeed, Zubulake has already produced a sort of “smoking gun:” an e-mail suggesting that she be fired “ASAP” after her EEOC charge was filed, in part so that she would not be eligible for year-end bonuses. See 8/21/01 e-mail from Mike Davies to Rose Tong (“8/21/01 e-Mail”), Ex. G to the 3/17/03 Affirmation of James A. Batson, counsel for Zubulake (“Batson Aff.”).

Page 30 of 201

other archived media. According to UBS, restoring those e-mails would cost approximately $175,000.00, exclusive of attorney time in reviewing the e-mails. Zubulake now moves for an order compelling UBS to produce those e-mails at its expense.

II. BACKGROUND

A. Zubulake’s Lawsuit

UBS hired Zubulake on August 23, 1999, as a director and senior salesperson on its U.S. Asian Equities Sales Desk (the “Desk”), where she reported to Dominic Vail, the Desk’s manager. At the time she was hired, Zubulake was told that she would be considered for Vail's position if and when it became vacant.

In December 2000, Vail indeed left his position to move to the Firm’s London office. But Zubulake was not considered for his position, and the Firm instead hired Matthew Chapin as director of the Desk. Zubulake alleges that from the outset Chapin treated her differently than the other members of the Desk, all of whom were male. In particular, Chapin “undermined Ms. Zubulake’s ability to perform her job by, inter alia: (a) ridiculing and belittling her in front of co-workers; (b) excluding her from work-related outings with male co-workers and clients; (c) making sexist remarks in her presence; and (d) isolating her from the other senior salespersons on the Desk by seating her apart from them.” No such actions were taken against any of Zubulake’s male co-workers.

Zubulake ultimately responded by filing a Charge of (gender) Discrimination with the EEOC on August 16, 2001. On October 9, 2001, Zubulake was fired with two weeks’ notice. On February 15, 2002, Zubulake filed the instant action, suing for sex discrimination and retaliation under Title VII, the New York State Human Rights Law, and the Administrative Code of the City of New York. UBS timely answered on March 12, 2002, denying the allegations. UBS’s argument is, in essence, that Chapin’s conduct was not unlawfully discriminatory because he treated everyone equally badly. On the one hand, UBS points to evidence that Chapin’s anti-social behavior was not limited to women: a former employee made allegations of national origin discrimination against Chapin, and a number of male employees on the Desk also complained about him. On the other hand, Chapin was responsible for hiring three new females employees to the Desk.

B. The Discovery Dispute

Discovery in this action commenced on or about June 3, 2002, when Zubulake served UBS with her first document request. At issue here is request number twenty-eight, for “[a]ll documents concerning any communication by or between UBS employees concerning Plaintiff.”

9 9 At the time she was terminated, Zubulake’s annual salary was approximately $500,000. Were she to receive full back pay and front pay, Zubulake estimates that she may be entitled to as much as $13,000,000 in damages, not including any punitive damages or attorney’s fees. …

Page 31 of 201

The term document in Zubulake’s request “includ[es], without limitation, electronic or computerized data compilations.” On July 8, 2002, UBS responded by producing approximately 350 pages of documents, including approximately 100 pages of e-mails. UBS also objected to a substantial portion of Zubulake’s requests.

On September 12, 2002—after an exchange of angry letters and a conference before United States Magistrate Judge Gabriel W. Gorenstein—the parties reached an agreement (the “9/12/02 Agreement”). With respect to document request twenty-eight, the parties reached the following agreement, in relevant part:

Defendants will [ ] ask UBS about how to retrieve e-mails that are saved in the firm’s computer system and will produce responsive e-mails if retrieval is possible and Plaintiff names a few individuals.

Pursuant to the 9/12/02 Agreement, UBS agreed unconditionally to produce responsive e-mails from the accounts of five individuals named by Zubulake: Matthew Chapin, Rose Tong (a human relations representation who was assigned to handle issues concerning Zubulake), Vinay Datta (a co-worker on the Desk), Andrew Clarke (another co-worker on the Desk), and Jeremy Hardisty (Chapin’s supervisor and the individual to whom Zubulake originally complained about Chapin). UBS was to produce such e-mails sent between August 1999 (when Zubulake was hired) and December 2001 (one month after her termination), to the extent possible.

UBS, however, produced no additional e-mails and insisted that its initial production (the 100 pages of e-mails) was complete. As UBS’s opposition to the instant motion makes clear—although it remains unsaid—UBS never searched for responsive e-mails on any of its backup tapes. To the contrary, UBS informed Zubulake that the cost of producing e-mails on backup tapes would be prohibitive (estimated at the time at approximately $300,000.00).

Zubulake, believing that the 9/12/02 Agreement included production of e-mails from backup tapes, objected to UBS’s nonproduction. In fact, Zubulake knew that there were additional responsive e-mails that UBS had failed to produce because she herself had produced approximately 450 pages of e-mail correspondence. Clearly, numerous responsive e-mails had been created and deleted1919 at UBS, and Zubulake wanted them.19 19 The term “deleted” is sticky in the context of electronic data. “ ‘Deleting’ a file does not actually erase that data from the computer’s storage devices. Rather, it simply finds the data’s entry in the disk directory and changes it to a ‘not used’ status—thus permitting the computer to write over the ‘deleted’ data. Until the computer writes over the ‘deleted’ data, however, it may be recovered by searching the disk itself rather than the disk’s directory. Accordingly, many files are recoverable long after they have been deleted—even if neither the computer user nor the computer itself is aware of their existence. Such data is referred to as ‘residual data.’ ” Deleted data may also exist because it was backed up before it was deleted. Thus, it may reside on backup tapes or similar media. Unless otherwise noted, I will use the term “deleted” data to mean residual data, and will refer to

Page 32 of 201

On December 2, 2002, the parties again appeared before Judge Gorenstein, who ordered UBS to produce for deposition a person with knowledge of UBS’s e-mail retention policies in an effort to determine whether the backup tapes contained the deleted e-mails and the burden of producing them. In response, UBS produced Christopher Behny, Manager of Global Messaging, who was deposed on January 14, 2003. Mr. Behny testified to UBS’s e-mail backup protocol, and also to the cost of restoring the relevant data.

C. UBS’s E–Mail Backup System

In the first instance, the parties agree that e-mail was an important means of communication at UBS during the relevant time period. Each salesperson, including the salespeople on the Desk, received approximately 200 e-mails each day. Given this volume, and because Securities and Exchange Commission regulations require it,2121 UBS implemented extensive e-mail backup and preservation protocols. In particular, e-mails were backed up in two distinct ways: on backup tapes and on optical disks.

1. Backup Tape Storage

UBS employees used a program called HP OpenMail, manufactured by Hewlett–Packard,for all work-related e-mail communications. With limited exceptions, all e-mails sent or received by any UBS employee are stored onto backup tapes. To do so, UBS employs a program called Veritas NetBackup, which creates a “snapshot” of all e-mails that exist on a given server at the time the backup is taken. Except for scheduling the backups and physically inserting the tapes into the machines, the backup process is entirely automated.

UBS used the same backup protocol during the entire relevant time period, from 1999 through 2001. Using NetBackup, UBS backed up its e-mails at three intervals: (1) daily, at the end of each day, (2) weekly, on Friday nights, and (3) monthly, on the last business day of the month. Nightly backup tapes were kept for twenty working days, weekly tapes for one year, and monthly tapes for three years. After the relevant time period elapsed, the tapes were recycled.2525

backed-up data as “backup tapes.”21 21 SEC Rule 17a–4, promulgated pursuant to Section 17(a) of the Securities Exchange Act of 1934,

provides in pertinent part:

Every [ ] broker and dealer shall preserve for a period of not less than 3 years, the first two years in an

accessible place ... [o]riginals of all communications received and copies of all communications sent by such

member, broker or dealer (including inter-office memoranda and communications) relating to his business as such.

25 25 Of course, periodic backups such as UBS’s necessarily entails the loss of certain e-mails. Because backups were conducted only intermittently, some e-mails that were deleted from the server were never backed up. For example, if a user both received and deleted an e-mail on the same day, it would not reside on any backup

Page 33 of 201

Once e-mails have been stored onto backup tapes, the restoration process is lengthy. Each backup tape routinely takes approximately five days to restore, although resort to an outside vendor would speed up the process (at greatly enhanced costs, of course). Because each tape represents a snapshot of one server’s hard drive in a given month, each server/month must be restored separately onto a hard drive. Then, a program called Double Mail is used to extract a particular individual’s e-mail file. That mail file is then exported into a Microsoft Outlook data file, which in turn can be opened in Microsoft Outlook, a common e-mail application. A user could then browse through the mail file and sort the mail by recipient, date or subject, or search for key words in the body of the e-mail.

Fortunately, NetBackup also created indexes of each backup tape. Thus, Behny was able to search through the tapes from the relevant time period and determine that the e-mail files responsive to Zubulake’s requests are contained on a total of ninety-four backup tapes.

2. Optical Disk Storage

In addition to the e-mail backup tapes, UBS also stored certain e-mails on optical disks. For certain “registered traders,” probably including the members of the Desk, a copy of all e-mails sent to or received from outside sources ( i.e., e-mails from a “registered trader” at UBS to someone at another entity, or vice versa) was simultaneously written onto a series of optical disks. Internal e-mails, however, were not stored on this system.

UBS has retained each optical disk used since the system was put into place in mid-1998. Moreover, the optical disks are neither erasable nor rewritable. Thus, UBS has every e-mail sent or received by registered traders (except internal e-mails) during the period of Zubulake’s employment, even if the e-mail was deleted instantaneously on that trader’s system.

The optical disks are easily searchable using a program called Tumbleweed. Using Tumbleweed, a user can simply log into the system with the proper credentials and create a plain language search. Search criteria can include not just “header” information, such as the date or the name of the sender or recipient, but can also include terms within the text of the e-mail itself. For example, UBS personnel could easily run a search for e-mails containing the words “Laura” or “Zubulake” that were sent or received by Chapin, Datta, Clarke, or Hardisty.

III. LEGAL STANDARD

. . .

tape. Similarly, an e-mail received and deleted within the span of one month would not exist on the monthly backup, although it might exist on a weekly or daily backup, if those tapes still exist. As explained below, if an e-mail was to or from a “registered trader,” however, it may have been stored on UBS’s optical storage devices. ……………….

Page 34 of 201

Rule 26(b)(2) imposes general limitations on the scope of discovery in the form of a “proportionality test:”

The frequency or extent of use of the discovery methods otherwise permitted under these rules and by any local rule shall be limited by the court if it determines that: (i) the discovery sought is unreasonably cumulative or duplicative, or is obtainable from some other source that is more convenient, less burdensome, or less expensive; (ii) the party seeking discovery has had ample opportunity by discovery in the action to obtain the information sought; or (iii) the burden or expense of the proposed discovery outweighs its likely benefit, taking into account the needs of the case, the amount in controversy, the parties' resources, the importance of the issues at stake in the litigation, and the importance of the proposed discovery in resolving the issues.

Finally, “[u]nder [the discovery] rules, the presumption is that the responding party must bear the expense of complying with discovery requests, but [it] may invoke the district court’s discretion under Rule 26(c) to grant orders protecting [it] from ‘undue burden or expense’ in doing so, including orders conditioning discovery on the requesting party's payment of the costs of discovery.”

The application of these various discovery rules is particularly complicated where electronic data is sought because otherwise discoverable evidence is often only available from expensive-to-restore backup media. That being so, courts have devised creative solutions for balancing the broad scope of discovery prescribed in Rule 26(b)(1) with the cost-consciousness of Rule 26(b)(2). By and large, the solution has been to consider cost-shifting: forcing the requesting party [in appropriate cases], rather than the answering party, to bear the cost of discovery.

By far, the most influential response to the problem of cost-shifting relating to the discovery of electronic data was … an eight-factor test to determine whether discovery costs should be shifted. Those eight factors are:

(1) the specificity of the discovery requests; (2) the likelihood of discovering critical information; (3) the availability of such information from other sources; (4) the purposes for which the responding party maintains the requested data; (5) the relative benefits to the parties of obtaining the information; (6) the total cost associated with production; (7) the relative ability of each party to control costs and its incentive to do so; and (8) the resources available to each party [citation omitted].

Page 35 of 201

Both Zubulake and UBS agree that the eight-factor Rowe test should be used to determine whether cost-shifting is appropriate.

IV. DISCUSSION

A. Should Discovery of UBS’s Electronic Data Be Permitted?

Under Rule 34, a party may request discovery of any document, “including writings, drawings, graphs, charts, photographs, phonorecords, and other data compilations....” The “inclusive description” of the term document “accord[s] with changing technology.” “It makes clear that Rule 34 applies to electronics [sic] data compilations.” Thus, “[e]lectronic documents are no less subject to disclosure than paper records.” This is true not only of electronic documents that are currently in use, but also of documents that may have been deleted and now reside only on backup disks.

That being so, Zubulake is entitled to discovery of the requested e-mails so long as they are relevant to her claims, which they clearly are. As noted, e-mail constituted a substantial means of communication among UBS employees. To that end, UBS has already produced approximately 100 pages of e-mails, the contents of which are unquestionably relevant.

Nonetheless, UBS argues that Zubulake is not entitled to any further discovery because it already produced all responsive documents, to wit, the 100 pages of e-mails. This argument is unpersuasive for two reasons. First, because of the way that UBS backs up its e-mail files, it clearly could not have searched all of its e-mails without restoring the ninety-four backup tapes (which UBS admits that it has not done). UBS therefore cannot represent that it has produced all responsive e-mails. Second, Zubulake herself has produced over 450 pages of relevant e-mails, including e-mails that would have been responsive to her discovery requests but were never produced by UBS. These two facts strongly suggest that there are e-mails that Zubulake has not received that reside on UBS’s backup media.4141

B. Should Cost–Shifting Be Considered?

Because it apparently recognizes that Zubulake is entitled to the requested discovery, UBS expends most of its efforts urging the court to shift the cost of production to “protect [it] ... from undue burden or expense.” Faced with similar applications, courts generally engage in some sort of cost-shifting analysis, whether the [above-]refined eight-factor … test or a cruder application of Rule 34’s proportionality test, or something in between.

41 41 UBS insists that “[f]rom the time Plaintiff commenced her EEOC action in August 2001 ... UBS collected and produced all existing responsive e-mails sent or received between 1999 and 2001 from these and other employees' computers.” Even if this statement is completely accurate, a simple search of employees’ computer files would not have turned up e-mails deleted prior to August 2001. Such deleted documents exist only on the backup tapes and optical disks, and their absence is precisely why UBS's production is not complete.

Page 36 of 201

The first question, however, is whether cost-shifting must be considered in every case involving the discovery of electronic data, which—in today’s world—includes virtually all cases. In light of the accepted principle, stated above, that electronic evidence is no less discoverable than paper evidence, the answer is, “No.” The Supreme Court has instructed that “the presumption is that the responding party must bear the expense of complying with discovery requests....” Any principled approach to electronic evidence must respect this presumption.

Courts must remember that cost-shifting may effectively end discovery, especially when private parties are engaged in litigation with large corporations. As large companies increasingly move to entirely paper-free environments, the frequent use of cost-shifting will have the effect of crippling discovery in discrimination and retaliation cases. This will both undermine the “strong public policy favor[ing] resolving disputes on their merits,” and may ultimately deter the filing of potentially meritorious claims.

Thus, cost-shifting should be considered only when electronic discovery imposes an “undue burden or expense” on the responding party. The burden or expense of discovery is, in turn, “undue” when it “outweighs its likely benefit, taking into account the needs of the case, the amount in controversy, the parties' resources, the importance of the issues at stake in the litigation, and the importance of the proposed discovery in resolving the issues.”

Many courts have automatically assumed that an undue burden or expense may arise simply because electronic evidence is involved. This makes no sense. Electronic evidence is frequently cheaper and easier to produce than paper evidence because it can be searched automatically, key words can be run for privilege checks, and the production can be made in electronic form obviating the need for mass photocopying.

In fact, whether production of documents is unduly burdensome or expensive turns primarily on whether it is kept in an accessible or inaccessible format (a distinction that corresponds closely to the expense of production). In the world of paper documents, for example, a document is accessible if it is readily available in a usable format and reasonably indexed. Examples of inaccessible paper documents could include (a) documents in storage in a difficult to reach place; (b) documents converted to microfiche and not easily readable; or (c) documents kept haphazardly, with no indexing system, in quantities that make page-by-page searches impracticable. But in the world of electronic data, thanks to search engines, any data that is retained in a machine readable format is typically accessible.5050

. . .

C. What Is the Proper Cost–Shifting Analysis?

5050 See Scheindlin & Rabkin, Electronic Discovery, 41 B.C. L.Rev. at 364 (“By comparison [to the time it would take to search through 100,000 pages of paper], the average office computer could search all of the documents for specific words or combination[s] of words in [a] minute, perhaps less.”); see also Public Citizen v. Carlin, 184 F.3d 900, 908–10 (D.C.Cir.1999).

Page 37 of 201

[The above] … eight factor test has unquestionably become the gold standard for courts resolving electronic discovery disputes. But … [¶] In order to maintain the presumption that the responding party pays, the cost-shifting analysis must be neutral; close calls should be resolved in favor of the presumption. The … factors, as applied, undercut that presumption for three reasons. First, the … [eight-factor] test is incomplete. Second, courts have given equal weight to all of the factors, when certain factors should predominate. Third, courts applying the … test have not always developed a full factual record.

. . .

c. A New Seven–Factor Test

Set forth below is a new seven-factor test….

1. The extent to which the request is specifically tailored to discover relevant information;

2. The availability of such information from other sources;

3. The total cost of production, compared to the amount in controversy;

4. The total cost of production, compared to the resources available to each party;

5. The relative ability of each party to control costs and its incentive to do so;

6. The importance of the issues at stake in the litigation; and

7. The relative benefits to the parties of obtaining the information.

. . .

D. A Factual Basis Is Required to Support the Analysis

Courts … have uniformly favored cost-shifting largely because of assumptions made concerning the likelihood that relevant information will be found. …

But such proof will rarely exist in advance of obtaining the requested discovery. The suggestion that a plaintiff must not only demonstrate that probative evidence exists, but also prove that electronic discovery will yield a “gold mine,” is contrary to the plain language of Rule 26(b)(1), which permits discovery of “any matter” that is “relevant to [a] claim or defense.”

. . .

Page 38 of 201

Requiring the responding party to restore and produce responsive documents from a small sample of backup tapes will inform the cost-shifting analysis laid out above. When based on an actual sample … —there will be tangible evidence of what the backup tapes may have to offer. There will also be tangible evidence of the time and cost required to restore the backup tapes, which in turn will inform the second group of cost-shifting factors. Thus, by requiring a sample restoration of backup tapes, the entire cost-shifting analysis can be grounded in fact rather than guesswork.

. . .

IV. CONCLUSION AND ORDER

In summary, deciding disputes regarding the scope and cost of discovery of electronic data requires a three-step analysis:

First, it is necessary to thoroughly understand the responding party’s computer system, both with respect to active and stored data. For data that is kept in an accessible format, the usual rules of discovery apply: the responding party should pay the costs of producing responsive data. A court should consider cost-shifting only when electronic data is relatively inaccessible, such as in backup tapes.

Second, because the cost-shifting analysis is so fact-intensive, it is necessary to determine what data may be found on the inaccessible media. Requiring the responding party to restore and produce responsive documents from a small sample of the requested backup tapes is a sensible approach in most cases.

. . .

Accordingly, UBS is ordered to produce all responsive e-mails that exist on its optical disks or on its active servers … at its own expense. UBS is also ordered to produce, at its expense, responsive e-mails from any five backups tapes selected by Zubulake. UBS should then prepare an affidavit detailing the results of its search, as well as the time and money spent. After reviewing the contents of the backup tapes and UBS’s certification, the Court will conduct the appropriate cost-shifting analysis.

A conference is scheduled in Courtroom 12C at 4:30 p.m. on June 17, 2003.

Notes and Questions:

1. Which party normally bears the cost burden associated with responding to documentary discovery request? How can that burden shift?

Page 39 of 201

2. Assume a judge believes there are good arguments on both sides of the “who pays” issue. What would be her default ruling?

3. What is Judge Scheindlin’s cost-conscious approach in this case?

4. This is one of the longer cases assigned in this course. Given the practical importance of electronic discovery, one hopes that the editor did not cut too much. What about your ethical obligations regarding electronically stored information. Consider the following, quoted from Qualcomm Inc. v. Broadcom Corp., 2008 WL 66932 (S.D. Cal., 2008, not reported in Fed. Supp. 2d):

Qualcomm had searched the email archives of twenty-one employees and located more than forty-six thousand documents (totaling more than three hundred thousand pages), which had been requested but not produced in discovery. ……………………………… . . .

Qualcomm withheld tens of thousands of emails … and then utilized Broadcom’s lack of access to the suppressed evidence to repeatedly and falsely aver that there was “no evidence” … Qualcomm’s misconduct in hiding the emails and electronic documents prevented Broadcom from correcting the false statements and countering the misleading arguments.

. . .

Qualcomm did not produce over 46,000 responsive documents, many of which directly contradict the … argument that Qualcomm repeatedly made to the court and jury.

. . .

Attorneys must take responsibility for ensuring that their clients conduct a comprehensive and appropriate document search. Producing 1.2 million pages of marginally relevant documents while hiding 46,000 critically important ones does not constitute good faith and does not satisfy either the client's or attorney's discovery obligations. Similarly, agreeing to produce certain categories of documents and then not producing all of the documents that fit within such a category is unacceptable.

5. Optional reading: Students taking an advanced ESI or e-discovery course should consider Judge Scheindlin’s (comparatively lengthy/decade later) 2012 ESI spoliation case, opting for adverse inference instructions rather than other sanctions. Sekisui America Corporation v. Hart (S.D.NY 2012).

Page 40 of 201

Page 41 of 201

SCHLAGENHAUF v. HOLDER

United States Supreme Court

379 U.S. 104 (1964)

Mr. Justice Goldberg, delivered the [5-4, with 4 discrete] opinion[s] of the Court.

This case involves the validity and construction of Rule 35(a) of the Federal Rules of Civil Procedure as applied to the examination of a defendant in a negligence action. …

I.

An action … was brought …seeking damages arising from personal injuries suffered by passengers of a bus which collided with the rear of a tractor-trailer. The named defendants were The Greyhound Corporation, owner of the bus; petitioner, Robert L. Schlagenhauf, the bus driver; Contract Carriers, Inc., owner of the tractor; Joseph L. McCorkhill, driver of the tractor;1

and National Lead Company, owner of the trailer. Answers were filed by each of the defendants denying negligence.

Greyhound then cross-claimed against Contract Carriers and National Lead for damage to Greyhound’s bus, alleging that the collision was due solely to their negligence in that the tractor-trailer was driven at an unreasonably low speed, had not remained in its lane, and was not equipped with proper rear lights. Contract Carriers filed an answer to this cross-claim denying its negligence and asserting ‘(t)hat the negligence of the driver of the … bus (petitioner Schlagenhauf) proximately caused and contributed to … Greyhound’s damages.’

Pursuant to a pretrial order, Contract Carriers filed a letter-which the trial court treated as, and we consider to be, part of the answer—alleging that Schlagenhauf was ‘not mentally or physically capable’ of driving a bus at the time of the accident.

Contract Carriers and National Lead then petitioned the District Court for an order directing petitioner Schlagenhauf to submit to both mental and physical examinations by one specialist in each of the following fields:

(1) Internal medicine;

(2) Ophthalmology;

(3) Neurology; and

1 1 In all the pleadings McCorkhill was joined with Contract Carriers. For simplicity, both will be referred to as Contract Carriers.

Page 42 of 201

(4) Psychiatry.

For the purpose of offering a choice to the District Court of one specialist in each field, the petition recommended two specialists in internal medicine, ophthalmology, and psychiatry, respectively, and three specialists in neurology—a total of nine physicians. The petition alleged that the mental and physical condition of Schlagenhauf was ‘in controversy’ as it had been raised by Contract Carriers’ answer to Greyhound’s cross-claim. This was supported by a brief of legal authorities and an affidavit of Contract Carriers’ attorney stating that Schlagenhauf had seen red lights 10 to 15 seconds before the accident, that another witness had seen the rear lights of the trailer from a distance of three-quarters to one-half mile, and that Schlagenhauf had been involved in a prior accident.

The certified record indicates that petitioner’s attorneys filed in the District Court a brief in opposition to this petition asserting, among other things, that ‘the physical and mental condition of the defendant Robert L. Schlagenhauf is not ‘in controversy’ herein in the sense that these words are used in Rule 35 of the Federal Rules of Civil Procedure; (and) that good cause has not been shown for the multiple examinations prayed for by the cross-defendant….

While disposition of this petition was pending, National Lead filed its answer to Greyhound’s cross-claim and itself ‘cross-claimed’ against Greyhound and Schlagenhauf for damage to its trailer. The answer asserted generally that Schlagenhauf’s negligence proximately caused the accident. The cross-claim additionally alleged that Greyhound and Schlagenhauf were negligent

(b)y permitting said bus to be operated over and upon said public highway by the said defendant, Robert L. Schlagenhauf, when both the said Greyhound Corporation and said Robert L. Schlagenhauf knew that the eyes and vision of the said Robert L. Schlagenhauf was (sic) impaired and deficient.

The District Court, on the basis of the petition filed by Contract Carriers, and without any hearing, ordered Schlagenhauf to submit to nine examinations—one by each of the recommended specialists—despite the fact that the petition clearly requested a total of only four examinations.3

3 3 After the Court of Appeals denied mandamus, the order was corrected by the District Court to reduce the number of examinations to the four requested. We agree with respondent that the issue of that error has become moot. However, the fact that the District Court ordered nine examinations is not irrelevant, together with all the other circumstances, in the consideration of whether the District Court gave to the petition for mental and physical examinations that discriminating application, which Rule 35 requires.

Page 43 of 201

… The Court of Appeals denied mandamus….

We granted certiorari to review undecided questions concerning the validity and construction of Rule 35.

II.

. . .

Here petitioner’s basic allegation was lack of power in a district court to order a mental and physical examination of a defendant. That this issue was substantial is underscored by the fact that the challenged order requiring examination of a defendant appears to be the first of its kind in any reported decision in the federal courts under Rule 35, and we have found only one such modern case in the state courts. …

The petitioner, however, also alleged that, even if Rule 35 gives a district court power to order mental and physical examinations of a defendant in an appropriate case, the District Court here exceeded that power in ordering examinations when petitioner’s mental and physical condition was not ‘in controversy’ and no ‘good cause’ was shown, both as expressly required by Rule 35. …

We recognize … [t]he meaning of Rule 35’s requirements of ‘in controversy’ and ‘good cause’ also raised issues of first impression.

. . .

III.

Rule 35 on its face applies to all ‘parties,’ which under any normal reading would include a defendant. Petitioner contends, however, that the application of the Rule to a defendant would be an unconstitutional invasion of his privacy….

We recognize that, insofar as reported cases show, this type of discovery in federal courts has been applied solely to plaintiffs, and that some early state cases seem to have proceeded on a theory that a plaintiff who seeks redress for injuries in a court of law thereby ‘waives' his right to claim the inviolability of his person.

. . .

We hold that Rule 35, as applied to either plaintiffs or defendants to an action, is free of constitutional difficulty and is within the scope of the Enabling Act. …

IV.

There remains the issue of the construction of Rule 35. We enter upon determination of this construction with the basic premise ‘that the deposition-discovery rules are to be accorded a

Page 44 of 201

broad and liberal treatment,’ to effectuate their purpose that ‘civil trials in the federal courts no longer need be carried on in the dark.’

Petitioner contends that even if Rule 35 is to be applied to defendants, which we have determined it must, nevertheless it should not be applied to him as he was not a party in relation to Contract Carriers and National Lead—the movants for the mental and physical examinations—at the time the examinations were sought.1111 The Court of Appeals agreed with petitioner’s general legal proposition, holding that the person sought to be examined must be an opposing party vis-a-vis the movant (or at least one of them). While it is clear that the person to be examined must be a party to the case, we are of the view that the Court of Appeals gave an unduly restrictive interpretation to that term. Rule 35 only requires that the person to be examined be a party to the ‘action,’ not that he be an opposing party vis-a -vis the movant. …

… The [prima facie] … basis for the examinations … [is the] … allegation that petitioner’s mental and physical condition had been … put in controversy by the National Lead answer and cross-claim….

Petitioner next contends that his mental or physical condition was not ‘in controversy’ and ‘good cause’ was not shown for the examinations, both as required by the express terms of Rule 35.

. . .

It is notable … that in none of the other discovery provisions is there a restriction that the matter be ‘in controversy.’…

This additional requirement of ‘good cause’ was reviewed [citation omitted] in the following words:

… [A] party may take depositions and serve interrogatories without prior sanction of the court or even its knowledge of what the party is doing. Only if a deponent refuses to answer in the belief that the question is irrelevant, can the moving party request under Rule 37 a court order requiring an answer.

Significantly, this freedom of action, afforded a party who resorts to depositions and interrogatories, is not granted to one proceeding under Rule … 35. Instead, the court must decide as an initial matter, and in every case, whether the motion requesting … the making of a physical or mental examination adequately demonstrates good cause. The specific requirement of good cause would be meaningless if good cause could be

11 11 We have already pointed out, ... that at the time of the first petition, Schlagenhauf was a named defendant in the original complaint but was not a named cross-defendant in any pleadings filed by Contract Carriers or National Lead. ………………………………………………………………………………………………

Page 45 of 201

sufficiently established by merely showing that the desired materials are relevant, for the relevancy standard has already been imposed by Rule 26(b). Thus, by adding the words ‘… good cause …,’ the Rules indicate that there must be greater showing of need under Rule … 35 than under the other discovery rules.

The courts of appeals in other cases have also recognized that [the] … good-cause requirement is not a mere formality, but is a plainly expressed limitation on the use of that Rule. Th[e] …‘in controversy’ and ‘good cause’ requirements of Rule 35 ... are not met by mere conclusory allegations of the pleadings—nor by mere relevance to the case—but require an affirmative showing by the movant that each condition … is really and genuinely in controversy and that good cause exists for ordering each particular examination. Obviously, what may be good cause for one type of examination may not be so for another. The ability of the movant to obtain the desired information by other means is also relevant.

Rule 35, therefore, requires discriminating application by the trial judge, who must decide, as an initial matter in every case, whether the party requesting a mental or physical examination or examinations has adequately demonstrated the existence of the Rule’s requirements of ‘in controversy’ and ‘good cause,’ which requirements … are necessarily related. This does not, of course, mean that the movant must prove his case on the merits in order to meet the requirements for a mental or physical examination. Nor does it mean that an evidentiary hearing is required in all cases. This may be necessary in some cases, but in other cases the showing could be made by affidavits or other usual methods short of a hearing. It does mean, though, that the movant must produce sufficient information, by whatever means, so that the district judge can fulfill his function mandated by the Rule.

Of course, there are situations where the pleadings alone are sufficient to meet these requirements. A plaintiff in a negligence action who asserts mental or physical injury places that mental or physical injury clearly in controversy and provides the defendant with good cause for an examination to determine the existence and extent of such asserted injury. This is not only true as to a plaintiff, but applies equally to a defendant who asserts his mental or physical condition as a defense to a claim, such as, for example, where insanity is asserted as a defense to a divorce action [or the original defendant files a counterclaim raising such issues vis-avis the original plaintiff].

Here, however, Schlagenhauf did not assert his mental or physical condition either in support of or in defense of a claim. His condition was sought to be placed in issue by other parties. Thus, under the principles discussed above, Rule 35 required that these parties make an affirmative showing that petitioner’s mental or physical condition was in controversy and that there was good cause for the [nine] examinations requested [and granted by the trial court]. This, the record plainly shows, they failed to do.

Page 46 of 201

The only allegations in the pleadings relating to this subject were the general conclusory statement in Contract Carriers’ answer to the cross-claim that ‘Schlagenhauf was not mentally or physically capable of operating’ the bus at the time of the accident and the limited allegation in National Lead’s cross-claim that, at the time of the accident, ‘the eyes and vision of ... Schlagenhauf was (sic) impaired and deficient.’

The attorney’s affidavit attached to the petition for the examinations provided:

That … Schlagenhauf, in his deposition … admitted that he saw red lights for 10 to 15 seconds prior to a collision with a semi-tractor trailer unit and yet drove his vehicle on without reducing speed and without altering the course thereof.

The only eye-witness to this accident known to this affiant … testified that immediately prior to the impact between the bus and truck that he had also been approaching the truck from the rear and that he had clearly seen the lights of the truck for a distance of three-quarters to one-half mile to the rear thereof.

… Schlagenhauf has admitted in his deposition … that he was involved in a (prior) similar type rear end collision. …

This record cannot support even the corrected order which required one examination in each of the four specialties of internal medicine, ophthalmology, neurology, and psychiatry.1515 Nothing in the pleadings or affidavit would afford a basis for a belief that Schlagenhauf was suffering from a mental or neurological illness warranting wide-ranging psychiatric or neurological examinations.Nor is there anything stated justifying the broad internal medicine examination.1616

The only specific allegation made in support of the four examinations ordered was that the ‘eyes and vision’ of Schlagenhauf were impaired. Considering this in conjunction with the affidavit, we would be hesitant to set aside a visual examination if it had been the only one ordered. However, as the case must be remanded to the District Court because of the other

15 15 See note 3, supra.16 16 Moreover, it seems clear that there was no compliance with Rule 35’s requirement that the trial judge delineate the ‘conditions, and scope’ of the examinations. Here the examinations were ordered in very broad, general areas. The internal medicine examination might for example, at the instance of the movant or its recommended physician extend to such things as blood tests, electrocardiograms, gastro-intestinal and other X-ray examinations. It is hard to conceive how some of these could be relevant under any possible theory of the case. …………………….

Page 47 of 201

examinations ordered, it would be appropriate for the District Judge to reconsider also this order in light of the guidelines set forth in this opinion.

The Federal Rules of Civil Procedure should be liberally construed, but they should not be expanded by disregarding plainly expressed limitations. The ‘good cause’ and ‘in controversy’ requirements of Rule 35 make it very apparent that sweeping examinations of a party who has not affirmatively put into issue his own mental or physical condition are not to be automatically ordered merely because the person has been involved in an accident—or, as in this case, two accidents—and a general charge of negligence is lodged. Mental and physical examinations are only to be ordered upon a discriminating application by the district judge of the limitations prescribed by the Rule. To hold otherwise would mean that such examinations could be ordered routinely in automobile accident cases. The plain language of Rule 35 precludes such an untoward result.

Accordingly, the judgment of the Court of Appeals is vacated and the case remanded to the District Court to reconsider the examination order in light of the guidelines herein formulated and for further proceedings in conformity with this opinion.

Vacated and remanded.

[The remaining opinions were omitted].

Notes and Questions:

1. The Supreme Court is in charge of the annual rules-making process, resulting in recommendations to Congress. From time to time, it nevertheless grants (as done in this case) “certiorari to review undecided questions concerning the validity and construction” of various FRCPs it has previously approved.

2. What document arguably triggered the “in controversy” element—and why?

3. In what kind of case would this requirement be clearly met—whereby no hearing would be required, and there would likely be no objection—for: (a) a physical examination, and (b) a mental examination?

4. If you were the Schlagenhauf judge, with which examination request would you have the: (a) most, and (b) least trouble deciding?

5. How does the Court define “good cause?”

6. Note the additional FRCP 35(a)(2)(B) requirement regarding the details which must be specified by the party seeking the examination. Which of the two basic Rule 35 requirements would that information tend to support?

Page 48 of 201

HICKMAN v. TAYLORUnited States Supreme Court

329 U.S. 495 (1947)

Mr. Justice Murphy delivered the [unanimous, with one concurring] opinion of the Court.

This case presents an important problem under the Federal Rules of Civil Procedure, as to the extent to which a party may inquire into oral and written statements of witnesses, or other information, secured by an adverse party’s counsel in the course of preparation for possible litigation after a claim has arisen. Examination into a person’s files and records, including those resulting from the professional activities of an attorney, must be judged with care. It is not without reason that various safeguards have been established to preclude unwarranted excursions into the privacy of a man’s work. At the same time, public policy supports reasonable and necessary inquiries. Properly to balance these competing interests is a delicate and difficult task.

… [T]he tug ‘J. M. Taylor’ sank while engaged in helping to tow a car float of the Baltimore & Ohio Railroad across the Delaware River at Philadelphia. The accident was apparently unusual in nature, the cause of it still being unknown. Five of the nine crew members were drowned. Three days later the tug owners and the underwriters employed a law firm, of which respondent Fortenbaugh is a member, to defend them against potential suits by representatives of the deceased crew members and to sue the railroad for damages to the tug.

Railroad car float resembling the one towed by the J.M. Taylor

Source: barge <http://upload.wikimedia.org/wikipedia/commons/thumb/6/65/NYH_carfloat.jpg/300px-NYH_carfloat.jpg>

Reprinted with permission of the United States Navy 

A public hearing was held … before the United States Steamboat Inspectors, at which the four survivors were examined. This testimony was recorded and made available to all interested

Page 49 of 201

parties. Shortly thereafter, Fortenbaugh privately interviewed the survivors and took statements from them with an eye toward the anticipated litigation; the survivors signed these statements…. Fortenbaugh also interviewed other persons believed to have some information relating to the accident and in some cases he made memoranda of what they told him. At the time when Fortenbaugh secured the statements of the survivors, representatives of two of the deceased crew members had been in communication with him. Ultimately claims were presented by representatives of all five of the deceased; four of the claims, however, were settled without litigation. The fifth claimant, petitioner herein, brought suit in a federal court under the Jones Act…, naming as defendants the two tug owners, individually and as partners, and the railroad.

One year later, petitioner [plaintiff] filed 39 interrogatories directed to the tug owners. The 38th interrogatory read:

State whether any statements of the members of the crews of the Tugs ‘J. M. Taylor’ and ‘Philadelphia’ or of any other vessel were taken in connection with the towing of the car float and the sinking of the Tug ‘John M. Taylor.

Attach hereto exact copies of all such statements if in writing, and if oral, set forth in detail the exact provisions of any such oral statements or reports.

. . .

The tug owners, through Fortenbaugh, answered all of the interrogatories except No. 38 …. While admitting that statements of the survivors had been taken, they declined to summarize or set forth the contents. They did so on the ground that such requests called ‘for privileged matter obtained in preparation for litigation’ and constituted ‘an attempt to obtain indirectly counsel’s private files.’ It was claimed that answering these requests ‘would involve practically turning over not only the complete files, but also the telephone records and, almost, the thoughts of counsel.’

In connection with the hearing on these objections, Fortenbaugh made a written statement and gave an informal oral deposition explaining the circumstances under which he had taken the statements. … The District Court … held that the requested matters were not privileged. The court then decreed that the tug owners and Fortenbaugh, as counsel and agent for the tug owners forthwith ‘Answer Plaintiff’s 38th interrogatory…; produce all written statements of witnesses obtained by Mr. Fortenbaugh, as counsel and agent for Defendants; state in substance any fact concerning this case which Defendants learned through oral statements made by witnesses to Mr. Fortenbaugh whether or not included in his private memoranda and produce Mr. Fortenbaugh’s memoranda containing statements of fact by witnesses or to submit these memoranda to the

Page 50 of 201

Court for determination of those portions which should be revealed to Plaintiff.’ Upon their refusal, the court adjudged them in contempt and ordered them imprisoned until they complied.

The Third Circuit Court of Appeals, also sitting en banc, reversed the judgment of the District Court. It held that the information here sought was part of the ‘work product of the lawyer’ and hence privileged from discovery under the Federal Rules of Civil Procedure. The importance of the problem, which has engendered a great divergence of views among district courts, led us to grant certiorari.

The pre-trial deposition-discovery mechanism established by Rules 26 to 37 is one of the most significant innovations of the Federal Rules of Civil Procedure. Under the prior federal practice, the pre-trial functions of notice-giving issue-formulation and fact-revelation were performed primarily and inadequately by the pleadings. Inquiry into the issues and the facts before trial was narrowly confined and was often cumbersome in method. The new rules, however, restrict the pleadings to the task of general notice-giving and invest the deposition-discovery process with a vital role in the preparation for trial. The various instruments of discovery now serve (1) as a device, along with the pre-trial hearing under Rule 16, to narrow and clarify the basic issues between the parties, and (2) as a device for ascertaining the facts, or information as to the existence or whereabouts of facts, relative to those issues. Thus civil trials in the federal courts no longer need be carried on in the dark. The way is now clear, consistent with recognized privileges, for the parties to obtain the fullest possible knowledge of the issues and facts before trial.

. . .

In urging that he has a right to inquire into the materials secured and prepared by Fortenbaugh, petitioner emphasizes that the deposition-discovery portions of the Federal Rules of Civil Procedure are designed to enable the parties to discover the true facts and to compel their disclosure wherever they may be found. It is said that inquiry may be made under these rules, epitomized by Rule 26, as to any relevant matter which is not privileged; and since the discovery provisions are to be applied as broadly and liberally as possible, the privilege limitation must be restricted to its narrowest bounds. On the premise that the attorney-client privilege is the one involved in this case, petitioner argues that it must be strictly confined to confidential communications made by a client to his attorney. And since the materials here in issue were secured by Fortenbaugh from third persons rather than from his clients, the tug owners, the [petitioner’s] conclusion is reached that these materials are proper subjects for discovery under Rule 26.

As additional support for this result, petitioner claims that to prohibit discovery under these circumstances would give a corporate defendant a tremendous advantage in a suit by an individual plaintiff. Thus in a suit by an injured employee against a railroad or in a suit by an insured person against an insurance company the corporate defendant could pull a dark veil of

Page 51 of 201

secrecy over all the petinent facts it can collect after the claim arises merely on the assertion that such facts were gathered by its large staff of attorneys and claim agents. At the same time, the individual plaintiff, who often has direct knowledge of the matter in issue and has no counsel until some time after his claim arises could be compelled to disclose all the intimate details of his case. By endowing with immunity from disclosure all that a lawyer discovers in the course of his duties, it is said, the rights of individual litigants in such cases are drained of vitality and the lawsuit becomes more of a battle of deception than a search for truth.

But framing the problem in terms of assisting individual plaintiffs in their suits against corporate defendants is unsatisfactory. Discovery concededly may work to the disadvantage as well as to the advantage of individual plaintiffs. Discovery, in other words, is not a one-way proposition. It is available in all types of cases at the behest of any party, individual or corporate, plaintiff or defendant. The problem thus far transcends the situation confronting this petitioner. And we must view that problem in light of the limitless situations where the particular kind of discovery sought by petitioner might be used.

… Mutual knowledge of all the relevant facts gathered by both parties is essential to proper litigation. To that end, either party may [generally] compel the other to disgorge whatever facts he has in his possession. The deposition-discovery procedure simply advances the stage at which the disclosure can be compelled from the time of trial to the period preceding it, thus reducing the possibility of surprise. But discovery, like all matters of procedure, has ultimate and necessary boundaries. … [L]imitations inevitably arise when it can be shown that the examination is being conducted in bad faith or in such a manner as to annoy, embarrass or oppress the person subject to the inquiry. And as Rule 26(b) provides, further limitations come into existence when the inquiry touches upon the irrelevant or encroaches upon the recognized domains of privilege.

We also agree that the memoranda, statements and mental impressions in issue in this case fall outside the scope of the attorney-client privilege and hence are not protected from discovery on that basis. It is unnecessary here to delineate the content and scope of that privilege as recognized in the federal courts. For present purposes, it suffices to note that the protective cloak of this privilege does not extend to information which an attorney secures from a witness while acting for his client in anticipation of litigation. Nor does this privilege concern the memoranda, briefs, communications and other writings prepared by counsel for his own use in prosecuting his client's case; and it is equally unrelated to writings which reflect an attorney's mental impressions, conclusions, opinions or legal theories.

But the impropriety of invoking that privilege does not provide an answer to the problem before us. Petitioner has made more than an ordinary request for relevant, non-privileged facts in the possession of his adversaries or their counsel. He has sought discovery as of right of oral and written statements of witnesses whose identity is well known and whose availability to petitioner appears unimpaired. He has sought production of these matters after making the most searching

Page 52 of 201

inquiries of his opponents as to the circumstances surrounding the fatal accident, which inquiries were sworn to have been answered to the best of their information and belief. Interrogatories were directed toward all the events prior to, during and subsequent to the sinking of the tug. Full and honest answers to such broad inquiries would necessarily have included all pertinent information gleaned by Fortenbaugh through his interviews with the witnesses. Petitioner makes no suggestion, and we cannot assume, that the tug owners or Fortenbaugh were incomplete or dishonest in the framing of their answers. In addition, petitioner was free to examine the public testimony of the witnesses taken before the United States Steamboat Inspectors [and thus not subject to any immunity]. We are thus dealing with an attempt to secure the production of written statements and mental impressions contained in the files and the mind of the attorney Fortenbaugh without any showing of necessity or any indication or claim that denial of such production would unduly prejudice the preparation of petitioner's case or cause him any hardship or injustice. For aught that appears, the essence of what petitioner seeks either has been revealed to him already through the interrogatories or is readily available to him direct from the witnesses for the asking.

The District Court … commanded Fortenbaugh to produce all written statements of witnesses and to state in substance any facts learned through oral statements of witnesses to him. Fortenbaugh was to submit any memoranda he had made of the oral statements so that the court might determine what portions should be revealed to petitioner. All of this was ordered without any showing by petitioner, or any requirement that he make a proper showing, of the necessity for the production of any of this material or any demonstration that denial of production would cause hardship or injustice. The court simply ordered production on the theory that the facts sought were material and were not privileged as constituting attorney-client communications.

In our opinion, neither Rule 26 nor any other rule dealing with discovery contemplates production under such circumstances. That is not because the subject matter is privileged or irrelevant, as those concepts are used in these rules.9 Here is simply an attempt, without purported necessity or justification, to secure written statements, private memoranda and personal recollections prepared or formed by an adverse party’s counsel in the course of his legal duties. As such, it falls outside the arena of discovery and contravenes the public policy underlying the orderly prosecution and defense of legal claims. Not even the most liberal of discovery theories can justify unwarranted inquiries into the files and the mental impressions of an attorney.

Historically, a lawyer is … bound to work for the advancement of justice while faithfully protecting the rightful interests of his clients. In performing his various duties, however, it is essential that a lawyer work with a certain degree of privacy, free from unnecessary intrusion by

9 9 Reports by a company’s servant, if made in the ordinary course of routine [business], are not privileged, even though it is desirable that the solicitor should have them and they are subsequently sent to him; but if the solicitor has requested that such documents shall always be prepared for his use and this was one of the reasons why they were prepared, they need not by disclosed.’

Page 53 of 201

opposing parties and their counsel. Proper preparation of a client’s case demands that he assemble information, sift what he considers to be the relevant from the irrelevant facts, prepare his legal theories and plan his strategy without undue and needless interference. That is the historical and the necessary way in which lawyers act within the framework of our system of jurisprudence to promote justice and to protect their clients' interests. This work is reflected, of course, in interviews, statements, memoranda, correspondence, briefs, mental impressions, personal beliefs, and countless other tangible and intangible ways—aptly … termed … as the ‘Work product of the lawyer.’ Were such materials open to opposing counsel on mere demand, much of what is now put down in writing would remain unwritten. An attorney’s thoughts, heretofore inviolate, would not be his own. Inefficiency, unfairness and sharp practices would inevitably develop in the giving of legal advice and in the preparation of cases for trial. The effect on the legal profession would be demoralizing. And the interests of the clients and the cause of justice would be poorly served.

We do not mean to say that all written materials obtained or prepared by an adversary’s counsel with an eye toward litigation are necessarily free from discovery in all cases. Where relevant and non-privileged facts remain hidden in an attorney’s file and where production of those facts is essential to the preparation of one’s [an opposing lawyer’s] case, discovery may properly be had. … And production might be justified where the witnesses are no longer available or can be reached only with difficulty. Were production of written statements and documents to be precluded under such circumstances, the liberal ideals of the deposition-discovery portions of the Federal Rules of Civil Procedure would be stripped of much of their meaning. But the general policy against invading the privacy of an attorney’s course of preparation is so well recognized and so essential to an orderly working of our system of legal procedure that a burden rests on the one who would invade that privacy to establish adequate reasons to justify production through a … court order. That burden, we believe, is necessarily implicit in the rules as now constituted.

… No attempt was made [by plaintiff’s counsel] to establish any reason why Fortenbaugh should be forced to produce the written statements. There was only a naked, general demand for these materials as of right and a finding by the District Court that no recognizable privilege was involved. That was insufficient to justify discovery under these circumstances and the court should have sustained the refusal of the tug owners and Fortenbaugh to produce.

But as to oral statements made by witnesses to Fortenbaugh, whether presently in the form of his mental impressions …, we do not believe that any showing of necessity can be made under the circumstances of this case so as to justify production [italics added]. Under ordinary conditions, forcing an attorney to repeat or write out all that witnesses have told him and to deliver the account to his adversary gives rise to grave dangers of inaccuracy and untrustworthiness. No legitimate purpose is served by such production. The practice forces the attorney to testify as to what he remembers or what he saw fit to write down regarding witnesses’ remarks. Such testimony could not qualify as evidence; and to use it for impeachment or

Page 54 of 201

corroborative purposes would make the attorney much less an officer of the court and much more an ordinary witness. The standards of the profession would thereby suffer.

Denial of production of this nature does not mean that … [h]e [adverse counsel becomes] unduly hindered in the preparation of his case, in the discovery of facts or in his anticipation of his opponents’ position. Searching interrogatories directed to Fortenbaugh and the tug owners, production of written documents and statements upon a proper showing and direct interviews with the witnesses themselves [and depositions may] all serve to reveal the facts in Fortenbaugh’s possession to the fullest possible extent consistent with public policy. Petitioner’s counsel frankly admits that he wants the oral statements only to help prepare himself to examine witnesses and to make sure that he has overlooked nothing. That is insufficient under the circumstances to permit him an exception to the policy underlying the privacy of Fortenbaugh’s professional activities. If there should be a rare situation justifying production of these matters, petitioner’s case is not of that type.

. . .

We therefore affirm the judgment of the Circuit Court of Appeals.

Affirmed.

Mr. Justice Jackson, concurring.

. . .

The real purpose and the probable effect of the practice ordered by the district court [file turnover] would be to put trials on a level even lower than a ‘battle of wits.’ I can conceive of no practice more demoralizing to the Bar than to require a lawyer to write out and deliver to his adversary an account of what witnesses have told him. Even if his recollection were perfect, the statement would be his language permeated with his inferences. Every one who has tried it knows that it is almost impossible so fairly to record the expressions and emphasis of a witness that when he testifies in the environment of the court and under the influence of the leading question there will not be departures in some respects. Whenever the testimony of the witness would differ from the ‘exact’ statement the lawyer had delivered, the lawyer’s statement would be whipped out to impeach the witness. Counsel producing his adversary’s ‘inexact’ statement could lose nothing by saying, ‘Here is a contradiction, gentlemen of the jury. I do not know whether it is my adversary or his witness who is not telling the truth, but one is not.’ Of course, if this practice were adopted, that scene would be repeated over and over again. The lawyer who delivers such statements often would find himself branded a deceiver afraid to take the stand to support his own version of the witness’s conversation with him, or else he will have to go on the

Page 55 of 201

stand to defend his own credibility—perhaps against that of his chief witness, or possibly even his client.

. . .

Having been supplied the names of the witnesses, petitioner’s lawyer gives no reason why he cannot interview them himself. If an employee-witness refuses to tell his story, he, too, may be examined under the Rules. He may be compelled on discovery as fully as on the trial to disclose his version of the facts. But that is his own disclosure—it can be used to impeach him if he contradicts it and such a deposition is not useful to promote an unseemly disagreement between the witness and the counsel in the case.

. . .

Notes and Questions:

1. Fortenbaugh “gave an informal oral deposition explaining the circumstances under which he had taken the [witness] statements.” That would not happen today. Attorneys oppose, but do not depose, one another.

2. The “statements and mental impressions in issue in this case fall outside the scope of the attorney-client privilege….” They were nevertheless deemed to be immune from discovery. Under what theory? Are they always immune?

3. Do reports—made in the ordinary course of business, then obtained by counsel—qualify as attorney work product?

4. Does the work product doctrine help or hinder what the court refers to as “[m]utual knowledge of all the relevant facts gathered by both parties [that] is essential to proper litigation…?”

5. Under what circumstances would the surviving tug boat sailors’ statements be obtainable by adverse counsel? Normally, however, adverse counsel can readily obtain the substantial equivalent. How so?

6. There are two categories of work product. What are they? How do they differ?

Page 56 of 201

1PERRY v. W. S. DARLEY & CO.

United States District Court, Eastern District, Wisconsin54 F. R.D. 278 (1971)

Professor’s Note: Read this case with a view toward distinguishing the three types of witnesses in civil litigation: (1); percipient (fact) witnesses; (2) expert consultants, who are employed by a party—retained to assists the hiring lawyer assess the technical aspects of a case; and (3) experts who have been subsequently designated to testify at trial—resulting in the waiver of conditional work product protection.

I have inserted ten footnotes—which are not a part of the original opinion. If I took the time to do so, you should take the time to digest them before class.

Court’s Opinion: Myron L. Gordon, District Judge.

The plaintiff Robert Perry, a volunteer fireman, seeks damages for injuries allegedly sustained when he was struck by a fire truck as he attempted to activate a pump manufactured and installed on the truck by the defendant.1 The defendant has moved for an order compelling disclosure of the names of certain experts who examined the truck and pump shortly after the accident; the refusal to disclose the names occurred during the oral deposition of Ward Johnson, an employee of the workmen's compensation carrier for the fire department for which Mr. Perry works.2

Counsel for the plaintiffs objected to disclosure of the experts’ names on the basis that such information “constitutes both privileged communication and work product.” However, the defendant argues in its brief that the experts are potential witnesses who “have knowledge or relevant facts” and that it is entitled, pursuant to Rule 26(b)(1), to the “identity and location of persons having knowledge of any discoverable matter.”3

The plaintiffs state that

1 1 This was a products liability case against a third party. The plaintiff could pursue only

administrative remedies against his employer.

22 The fire company’s insurance carrier was thus asserting the interests of the fire

company’s employee Perry.

Page 57 of 201

It should be noted that the [defendant’s] question did not seek the disclosure of the identity of experts which plaintiffs expect to call as witnesses4

upon the trial, which disclosure is explicitly required…. Federal Rule 26(b)(4)(A). However, significantly, no similar requirement is made for the disclosure of identity of experts not retained or specially employed for purposes of testifying at trial. See Rule 26(b)(4)(B).5

. . .

In addition, the Advisory Committee note to Rule 26(b)(4) states, in part:

It should be noted that the subdivision does not address itself to the expert whose information was not acquired in preparation for trial but rather because he was an actor or viewer with respect to transactions or occurrences that are part of the subject matter of the lawsuit. Such an expert should be treated as an ordinary witness.

The plaintiffs concede … that they have a duty to disclose the identity of any expert whom they expect to call as a witness at the trial.6 As to experts who have been engaged “in anticipation of litigation or preparation for trial,” however, the plaintiffs point to the provisions of Rule 26(b)(4)(B) to the effect that, when such experts are “not expected to be called as … [witnesses] … at trial,” facts known or opinions held by them are discoverable

33 Note that FRCP 26(b)(1) does not expressly distinguish between lay or expert

witnesses who may be “persons having [such] knowledge.”

44 What kind of witness is the court referring to at this point?

55 What kind of “expert” is the court referring to at this point?

66 The retaining party thus designates that party’s consultant as an expert witness, thus

waving the former work product protection. Why would the retaining attorney want to do that?

Page 58 of 201

... only … upon a showing of exceptional circumstances under which it is impracticable for the party seeking discovery to obtain facts or opinions on the same subject by other means.7

. . .

Rule 26(b)(4)(B) makes no distinction between the identity of an expert and facts known or opinions held by him, although … “Apparently one party can find out the names of experts specially retained by another party who are not to be called.”8 However, in an affidavit attached to the defendant's motion, the attorney for the defendant states that, because the experts viewed the fire truck well before the commencement of the present action, “this in and of itself is sufficient cause to require the plaintiff to turn over not only the names of the expert or experts but the reports of said expert or experts.”9

In my opinion, no showing of “exceptional circumstances” has been made by the defendant in the case at bar, nor is there any evidence to indicate that the experts were actors or viewers “with respect to [the] transactions or occurrences that are part of the subject matter of the lawsuit.”10 Rule 26(b)(4) imposes a more rigorous standard upon the discovery of facts known and opinions held by an expert than is imposed with regard to other witnesses; I am not persuaded that such standard should be relaxed in the present case with regard to the identity of the experts who viewed the fire truck shortly after the accident.

77 What case is this passage referring to? What FRCP effectively codified that case?

88 But would that information not infringe upon the retaining party’s work product?

Should an adversary be permitted to: (a) inquire as to the identity of any consultant that the

retaining party decided not to use?; or (b) take the deposition of that unused consultant? Would it

matter if the party with the financial resources effectively monopolized the few potential experts

in the area, to keep the other party from having access to a local consultant?

99 Of the three possible types of witness, which would they be in this circumstance?

Should there be an exception for reports written, or people dispatched to the scene of an accident

in the ordinary course of business–which could overlap with doing so in anticipation of

litigation?

Page 59 of 201

Therefore, it is ordered that the defendant's motion for an order compelling answers to certain questions propounded to Ward Johnson be and hereby is denied.

Notes and Questions:

1. FRCP 26 does not clearly distinguish between the two types of expert. What are they?

2. What pre-trial event triggers a change in status (for the same “expert”), from the one type of expert to the other?

3. In an illustrative discussion, of the retained consultant-testifying expert distinction, by the California Court of Appeals, in DeLuca v. State Fish Co., Inc., 217 Cal.App.4th 671, 688–689 (2013):

If the expert is solely retained as a consulting expert, the attorney-client privilege applies to communications made by the client or the attorney to the expert in order for the expert to properly advise counsel. As noted above, the attorney-client privilege applies to communications “to whom disclosure is reasonably necessary for the transmission of the information or the accomplishment of the purpose for which the lawyer is consulted;” this clearly includes communications to a consulting expert. Similarly, a consulting expert’s [written] report, prepared at the attorney’s request and with the purpose of assisting the attorney in trial preparation, constitutes work product, entitled to conditional protection and barred from discovery in the absence of good cause.

The situation is different, however, with a testifying expert. As a general rule, neither the attorney-client privilege nor the work product protection will prevent disclosure of statements to, or reports from, a testifying expert. When a client calls that party’s attorney to testify at trial to information the attorney could have only learned through the attorney-client privilege, the privilege is waived. “It follows that the same waiver exists when an agent of the attorney is to testify to matters that he could only have learned because of the attorney-client relationship.” Once a testifying expert is designated as a [deposition or trial] witness, the attorney-client privilege no longer applies, “because the decision to use the expert as a witness manifests the client's consent to disclosure of

0 10 Assume that these Johnny-on-the-spot fire department employees, with the relevant

expertise are on the scene, and observe whether the allegedly defective pump was working/not

working; or that there was a grinding noise coming from that pump; or that they saw smoke

coming from that pump. Should the trial judge’s ruling be the same?

Page 60 of 201

the information.” Similarly, when an expert witness is expected to testify, the expert’s report, which was subject to the conditional work product protection, becomes discoverable, as the mere fact that the expert is expected to testify generally establishes good cause for its disclosure.

Page 61 of 201

COBLE v. CITY OF WHITE HOUSE, TENNESSEEUnited States Court of Appeals, Sixth Circuit

634 F.3d 865 (2011)

Bell, District Judge [delivered the unanimous opinion of the court].

Plaintiff Jerry T. Coble (“Coble”) appeals the district court’s entry of summary judgment in favor of Officer Curtis Carney, Jr. on Coble’s claim under 42 U.S.C. § 1983 that Officer Carney used excessive force against him during his arrest for drunk driving. The issue on appeal is whether the district court erred in finding that there was no question of fact for trial because Coble’s testimony regarding the force used was contradicted by a contemporaneous audio recording. For the reasons that follow, we REVERSE the district court’s judgment.

I.

On April 6, 2007, at approximately 10:40 p.m., Officer Curtis Carney, Jr., was on patrol for the City of White House Police Department, when a truck driven by Coble exited the parking lot of Bob & Rhonda’s Sports Grill and pulled onto the highway in front of Officer Carney’s patrol car. After seeing the truck cross the fog line three times, Officer Carney activated his in-car video camera and flashing lights. Coble did not stop. He continued driving until he turned into the driveway of his home and reached the end of his driveway.

City of White House, Tennessee jail area and patrol car Public domain sources: <http://www.white <http://www.cityofwhitehouse.com/images/ housetn.com/images/police2743.JP> YourGovernment/Police%20Patrol%201>

Officer Carney pulled up behind him and exited his patrol car. Coble did not obey Officer Carney’s preliminary commands or answer his questions. Instead, he argued with Officer Carney, told him to get off his property, and began walking toward his house. When he failed to

Page 62 of 201

obey Officer Carney’s command to stop, Officer Carney removed his chemical agent from its holster, sprayed Coble, and performed a take-down maneuver, during which Coble sustained an open fracture of his right ankle. After a struggle on the ground, Officer Carney, with the assistance of Officer Scott Bilbrey, who had arrived on the scene, succeeded in bringing Coble’s arms behind his back and handcuffing him. Once Coble was handcuffed, he did not offer any further resistance.

The dispute that is at the heart of this appeal concerns what happened after Coble was handcuffed. None of these events were captured on videotape because they did not occur in front of the patrol car. However, even after Officer Carney and Coble were out of camera range, sounds transmitted by the microphone worn by Officer Carney continued to be recorded. Coble testified that Officer Carney pulled him up by the handcuffs, and, pushing him from behind, walked him 7 or 8 steps on his broken ankle, leaving a 34-foot trail of blood. Coble testified that Officer Carney would have known that his leg was broken because bones were sticking out of Coble’s leg, his tennis shoe was laid over sideways, one of his legs was shorter than the other, and he was screaming and calling Officer Carney names. Coble testified that when Officer Carney finally stopped, he let go of the handcuffs and dropped Coble face-first on the concrete.

Officer Carney’s testimony differs markedly from Coble’s testimony. Officer Carney testified that, after handcuffing Coble, he and Officer Bilbrey helped Coble to a standing position and began walking with him toward the patrol car. After three or four steps, Coble said his leg was broken. Officer Carney testified that he looked down, saw that Coble's leg was broken, and immediately sat him down on the driveway.

Coble was transported by helicopter to a hospital. A blood sample collected from him at 2:10 a.m. on April 7, 2007, indicated a blood alcohol level of 0.16. Coble pled guilty to charges of driving under the influence and resisting arrest.

Coble filed this action against Officer Carney, Officer Bilbrey, and the City of White House, alleging claims of excessive force, false arrest, and failure to implement appropriate policies under 42 U.S.C. § 1983, as well as state law claims of negligence, negligent infliction of emotional distress, negligent training and supervision, reckless infliction of emotional distress, and assault and battery. The claims against Officer Bilbrey were dismissed on stipulation of the parties. Officer Carney and the City of White House filed motions for summary judgment. The district court determined that Coble’s § 1983 claim for the excessive use of force before he was handcuffed and brought under control was barred [citation omitted and italics added]. With respect to Coble’s claim that Officer Carney used excessive force after he was handcuffed by walking him on a broken ankle and dropping him face-first onto the ground [italics added], the district court cited Scott v. Harris, 550 U.S. 372 (2007), in support of its determination that, in light of the audio recording, it was not required to accept Coble’s version of the events.

Page 63 of 201

Listening to the audiotape, no reasonable jury could find by a preponderance of the evidence that Coble screamed during the first few steps while he was being escorted, that he called Officer Carney names to get him to stop walking, or that Coble “splattered” on the pavement [face down]. To the contrary, the audiotape reveals only the sound of shuffling bodies as if the three men were walking, and Coble was silent. After a few moments, Coble cried out that his leg was broken, and the shuffling stopped. An officer said, “Sit down!” There is no audible noise that once could associate with a body dropping or “splattering” to the pavement.” ... The testimony of Officers Carney and Bilbrey square with the audiotape, while Coble’s testimony does not. Therefore, under Scott, the Court need not adopt Coble’s version in ruling on the motions for summary judgment.

The district court concluded that because Coble failed to generate a genuine issue of material fact for trial on his constitutional claim, Officer Carney was entitled to summary judgment.

The district court also concluded that Officer Carney was entitled to qualified immunity, and that there was no evidence to support Coble’s claims against the City of White House for failure to train or supervise. The district court accordingly granted the defendants’ motions for summary judgment on Coble’s § 1983 claims, and declined to exercise supplemental jurisdiction over Coble’s state-law claims. Coble appealed.

II.

Coble’s sole challenge on appeal is to the district court’s determination that Officer Carney did not use excessive force after Coble was restrained in handcuffs.2

We review a district court order granting summary judgment de novo. “Summary judgment is proper if the evidence, taken in the light most favorable to the nonmoving party, shows that there are no genuine issues of material fact and that the moving party is entitled to a judgment as a matter of law.”

A constitutional excessive force claim is analyzed under an “objective-reasonableness standard, which depends on the facts and circumstance of each case viewed from the perspective of a reasonable officer on the scene.” “The first step in assessing the constitutionality of [an officer’s] actions is to determine the relevant facts.” Scott. To the extent there is disagreement about the facts, we must review the evidence in the light most favorable to the plaintiff, and draw all inferences in his favor.

Construing the facts on summary judgment in the light most favorable to the non-moving party usually means adopting the plaintiff’s version of the facts. Scott. However, the Supreme 2 2 Coble has conceded that … his plea of guilty to resisting arrest barred any claim that Officer Carney used excessive force against him before his arrest.

Page 64 of 201

Court clarified in Scott that facts must be viewed in the light most favorable to the non-moving party “only if there is a ‘genuine’ dispute as to those facts” (quoting Fed.R.Civ.P. 56(c)). In Scott, the Supreme Court held that a police officer was entitled to summary judgment on a motorist’s claim that the officer used excessive force in ramming his car after a high-speed chase, notwithstanding the fact that the motorist and the officer gave conflicting testimony regarding the events in question. In Scott, the conflicting testimony did not create an issue of fact for trial because the record included a videotape capturing the police chase which clearly contradicted the motorist's contention that he was driving carefully. As noted by the Supreme Court:

When opposing parties tell two different stories, one of which is blatantly contradicted by the record, so that no reasonable jury could believe it, a court should not adopt that version of the facts for purposes of ruling on a motion for summary judgment.

In the summary judgment context, “appeals courts should not accept ‘visible fiction’ that is ‘so utterly discredited by the record that no reasonable jury could have believed’ it.”

Coble contends that Scott and its progeny in the Sixth Circuit have limited Scott to cases where the events were recorded on a videotape, and that it was improper for the district court to extend Scott to a case involving an audio recording. ………………………………………. There is nothing in the Scott analysis that suggests that it should be restricted to cases involving videotapes. The Scott opinion does not focus on the characteristics of a videotape, but on “the record.” (“When opposing parties tell two different stories, one of which is blatantly contradicted by the record....”; “Respondent’s version of events is so utterly discredited by the record....”; “At the summary judgment stage ... once we have determined the relevant set of facts and drawn all inferences in favor of the nonmoving party to the extent supportable by the record ... the reasonableness of [the respondent’s] actions ... is a pure question of law” (emphasis added)). Although we have not had occasion to apply the Scott analysis to audio recordings, courts routinely look to Scott for guidance in determining whether the non-moving party’s version of the events is so blatantly contradicted by objective evidence in the record that it fails to create a genuine issue of material fact for trial, even in the absence of a videotape. … Accordingly, our decision does not turn on whether it was proper for the district court to consider the audio recording—it was—but on whether the district court properly found that Coble’s testimony was “blatantly contradicted” by the audio recording in this case. We think not. The district court found that the audio recording blatantly contradicted Coble’s deposition testimony that he screamed during the first few steps while he was being escorted, and called Officer Carney names to get him to stop walking. This finding was based upon the lack of any audible screams or name-calling on the recording. The district court also found that no reasonable jury could find that Coble “splattered” on the pavement because there was “no audible noise that once could associate with a body dropping or ‘splattering’ to the pavement.”

Page 65 of 201

The lack of sound on an audio recording cannot be reliably used to discount Coble’s testimony. Many factors could affect what sounds are recorded, including the volume of the sound, the nature of the activity at issue, the location of the microphone, whether the microphone was on or off, and whether the microphone was covered. This case differs from Scott, where there were no allegations or indications that the recording was doctored or altered in any way, or any contention that what it depicted differed from what actually happened. Here, in contrast to the plaintiff in Scott, Coble does not merely characterize the recording differently. Rather, Coble insists that the facts differed from what was recorded. Coble testified that he screamed, that he called Officer Carney names, that he was forced to walk on his broken ankle, and that he was dropped face-first on the ground. His testimony is not “blatantly contradicted” by the lack of corroborating sound on the audio recording. A reasonable jury could believe Coble’s version of the events. ………………………………………………………………………………………… In addition, the recording does not indicate when Officer Carney became aware of Coble’s broken ankle, or how far he made Coble walk after he became aware of the injury. Facts that are not blatantly contradicted by the audio recording remain entitled to an interpretation most favorable to the non-moving party. Coble’s testimony that Officer Carney would have known that his ankle was broken is not “so utterly discredited” by the audio recording, and must be construed in the light most favorable to Coble. …………………………………………. Even if part of Coble’s testimony is blatantly contradicted by the audio recording, that does not permit the district court to discredit his entire version of the events. We allow cases to proceed to trial even though a party’s evidence is inconsistent, because “[i]n reviewing a summary judgment motion, [judicial, as opposed to jury] credibility judgments and weighing of the evidence are prohibited.” … ……………………………………………………………….. We cannot say that Coble’s version of the events was so utterly discredited by the record that no reasonable jury could believe it. Accordingly, there is a genuine question of material fact as to whether Officer Carney used excessive force, and the district court erred by granting summary judgment for Office Carney. …………………………………………………………. . . . ……………………………………………. IV. CONCLUSION …………………………………….. Because there is a genuine issue of material fact as to whether Officer Carney used excessive force after Coble was handcuffed, we REVERSE the order of the district court granting summary judgment to Officer Carney and REMAND for further proceedings consistent with this opinion.

Notes and Questions: …………………………………… 1. What is the moving party’s basic argument in all summary judgment motions? See Rule 56(a). …………………………………………………………………………………………. 2. There was an obvious disagreement about the factual circumstances just after the arrest. What approach does a court employ, when considering such summary judgment evidence, given the conflicting inferences one could draw from the factual evidence? …………………..... 3. When there is a blatant contradiction in the facts adduced for summary judgment

Page 66 of 201

motion, does the court necessarily deny summary judgment? …………………………………… 4. How does a summary judgment motion differ from trial?

Page 67 of 201

ADICKES v. S. H. KRESS & CO.United States Supreme Court

398 U.S. 144 (1970)

Mr. Justice Harlan delivered the [6-2, with two concurring] opinion[s] of the Court.

Petitioner, Sandra Adickes, a white school teacher from New York, brought this suit in the United States District Court for the Southern District of New York against respondent S. H. Kress & Co. (‘Kress’) to recover damages under 42 U.S.C. s[ection] 19831 for an alleged violation of her constitutional rights under the Equal Protection Clause of the Fourteenth Amendment [§1]. The suit arises out of Kress’ refusal to serve lunch to Miss Adickes at its restaurant facilities in its Hattiesburg, Mississippi, store on August 14, 1964, and Miss Adickes’ subsequent arrest upon her departure from the store by the Hattiesburg police on a charge of vagrancy. At the time of both the refusal to serve and the arrest, Miss Adickes was with six young people, all Negroes, who were her students in a Mississippi ‘Freedom School’ where she was teaching that summer. Unlike Miss Adickes, the students were offered service, and were not arrested.

Sandra Adickes, former teacher at Hattiesburg, Mississippi Freedom School

Source: <http://nathenson.org/aalscivpro/wp-content/uploads/2011/08/Adickes-300x183.jpg>

Reprinted with permission of the Association of American Law Schools Civil Procedure webpage owner

1 1 … ‘Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State of Territory, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress.’ ……

Page 68 of 201

Petitioner’s complaint had two counts, … each alleging that Kress had deprived her of the right under the Equal Protection Clause of the Fourteenth Amendment not to be discriminated against on the basis of race. The first count charged that Miss Adickes had been refused service by Kress because she was a ‘Caucasian in the company of Negroes.’ … [T]he District [trial] Court directed a verdict in favor of respondent [Kress]. A divided panel of the Court of Appeals affirmed …

The second count of her complaint, alleging that both the refusal of service and her subsequent arrest were the product of a conspiracy between Kress and the Hattiesburg police, was dismissed before trial on a motion for summary judgment. The District Court ruled that petitioner had ‘failed to allege any facts from which a conspiracy might be inferred’ [which was] … unanimously affirmed by the Court of Appeals.

. . .

I

Briefly stated, the conspiracy count of petitioner’s complaint made the following allegations: While serving as a volunteer teacher at a ‘Freedom School’ for Negro children in Hattiesburg, Mississippi, petitioner went with six of her students to the Hattiesburg Public Library…. The librarian refused to allow the Negro students to use the library, and asked them to leave. Because they did not leave, the librarian called the Hattiesburg chief of police who told petitioner and her students that the library was closed, and ordered them to leave. From the library, petitioner and the students proceeded to respondent’s store where they wished to eat lunch. According to the complaint, after the group sat down to eat, a policeman came into the store ‘and observed (Miss Adickes) in the company of the Negro students.’ A waitress then came to the booth where petitioner was sitting, took the orders of the Negro students, but refused to serve petitioner because she was a white person ‘in the company of Negroes.’ The complaint goes on to allege that after this refusal of service, petitioner and her students left the Kress store. When the group reached the sidewalk outside the store, ‘the Officer of the Law who had previously entered (the) store’ arrested petitioner on a groundless charge of vagrancy and took her into custody.

. . .

A. CONSPIRACIES BETWEEN PUBLIC OFFICIALS AND PRIVATE PERSONS—GOVERNING PRINCIPLES

The terms of s[ection] 1983 make plain two elements that are necessary for recovery. First, the plaintiff must prove that the defendant has deprived him of a right secured by the ‘Constitution and laws’ of the United States. Second, the plaintiff must show that the defendant

Page 69 of 201

deprived him of this constitutional right ‘under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory.’ This second element requires that the plaintiff show that the defendant acted ‘under color of law.’

. . . Although this is a lawsuit against a private party, not the State or one of its officials, our cases make clear that petitioner will have made out a violation of her Fourteenth Amendment rights and will be entitled to relief under s[ection] 1983 if she can prove that a Kress employee, in the course of employment, and a Hattiesburg policeman somehow reached an understanding to deny Miss Adickes service in The Kress store, or to cause her subsequent arrest because she was a white person in the company of Negroes.

. . . B. SUMMARY JUDGMENT

We now proceed to consider whether the District Court erred in granting summary judgment on the conspiracy count. In granting respondent’s motion, the District Court simply stated that there was ‘no evidence in the complaint or in the affidavits and other papers from which a ‘reasonably-minded person’ might draw an inference of conspiracy.’ Our own scrutiny of the factual allegations of petitioner’s complaint, as well as the material found in the affidavits and depositions presented by Kress to the District Court, however, convinces us that summary judgment was improper here, for we think respondent failed to carry its burden of showing the absence of any genuine issue of fact. Before explaining why this is so, it is useful to state the factual arguments, made by the parties concerning summary judgment, and the reasoning of the courts below.

In moving for summary judgment, Kress argued that ‘uncontested facts’ established that no conspiracy existed between any Kress employee and the police. To support this assertion, Kress pointed first to the statements in the deposition of the store manager (Mr. Powell) that (a) he had not communicated with the police, and that (b) he had, by a prearranged tacit signal,ordered the food counter supervisor to see that Miss Adickes was refused service only because he was fearful of a riot in the store by customers angered at seeing a ‘mixed group’ of whites and blacks eating together. Kress also relied on affidavits from the Hattiesburg chief of police,1111 and the two arresting officers,1212 to the effect that store manager Powell had not requested that petitioner be arrested. Finally, Kress pointed to the statements in petitioner’s own deposition that

11 11 The affidavit of the chief of police, who it appears was not present at the arrest, states in relevant part: ‘Mr. Powell had made no request of me to arrest Miss Sandra Adickes or any other person, in fact, I did not know Mr. Powell personally until the day of this statement. … Mr. Powell and I had not discussed the arrest of this person until the day of this statement and we had never previously discussed her in any way.’ 12 12 The affidavits of Sergeant Boone and Officer Hillman each state, in identical language: ‘I was contacted … by … owners of S. H. Kress and Company, who requested that I make a statement concerning [an] alleged conspiracy in connection with the aforesaid arrest. This arrest was made on the public streets of Hattiesburg, Mississippi, and was an officers discretion arrest. I had not consulted with Mr. G. T. Powell, Manager of S. H. Kress and Company in Hattiesburg, and did not know his name until this date. No one at the Kress store asked that the arrest be made and I did not consult with anyone prior to the arrest.’

Page 70 of 201

she had no knowledge of any communication between any Kress employee and any member of the Hattiesburg police, and was relying on circumstantial evidence to support her contention that there was an arrangement between Kress and the police.

Petitioner, in opposing summary judgment, pointed out that respondent had failed in its moving papers to dispute the allegation in petitioner’s complaint, a statement at her deposition,1313 and an unsworn statement by a Kress employee,1414 all to the effect that there was a policeman in the store at the time of the refusal to serve her, and that this was the policeman who subsequently arrested her. Petitioner argued that although she had no knowledge of an agreement between Kress and the police, the sequence of events created a substantial enough possibility of a conspiracy to allow her to proceed to trial, especially given the fact that the non-circumstantial evidence of the conspiracy could only come from adverse witnesses. Further, she submitted an affidavit specifically disputing the manager’s assertion that the situation in the store at the time of the refusal was ‘explosive,’ thus creating an issue of fact as to what his motives might have been in ordering the refusal of service.

We think that on the basis of this record, it was error to grant summary judgment. As the moving party, respondent had the burden of showing the absence of a genuine issue as to any material fact, and for these purposes the material it lodged must be viewed in the light most favorable to the opposing party. Respondent here did not carry its burden because of its failure to foreclose the possibility [i.e., via store employees] that there was a policeman in the Kress store while petitioner was awaiting service, and that this policeman reached an understanding with some Kress employee that petitioner not be served.

. . .

13 13 When asked whether she saw any policeman in the store up to the time of the refusal of service, Miss Adickes answered: ‘My back was to the door, but one of my students saw a policeman come in.’ She went on to identify the student as ‘Carolyn.’ At the trial, Carolyn Moncure, one of the students who was with petitioner, testified that ‘about five minutes’ after the group had sat down and while they were still waiting for service, she saw a policeman come in the store. She stated: ‘(H)e came in the store, my face was facing the front of the store, and he came in the store and he passed, and he stopped right at the end of our booth, and he stood up and he looked around and he smiled, and he went to the back of the store, he came right back and he left out.’ This testimony was corroborated by that of Dianne Moncure, Carolyn’s sister, who was also part of the group. She testified that while the group was waiting for service, a policeman entered the store, stood ‘for awhile’ looking at the group, and then ‘walked to the back of the store.’ 14 14 During discovery, respondent gave to petitioner an unsworn statement by Miss Irene Sullivan, a check-out girl. In this statement Miss Sullivan said that she had seen Patrolman Hillman come into the store ‘(s)hortly after 12:00 noon,’ while petitioner's group was in the store. She said that he had traded a ‘hello greeting’ with her, and then walked past her check-out counter toward the back of the store ‘out of (her) line of vision.’ She went on: ‘A few minutes later Patrolman Hillman left our store by the northerly front door just slightly ahead of a group composed of several Negroes accompanied by a white woman. As Hillman stepped onto the sidewalk outside our store the police car pulled across the street and into an alley that is alongside our store. The police car stopped and Patrolman Hillman escorted the white woman away from the Negroes and into the police car.’ …………………….

Page 71 of 201

Given these unexplained gaps in the materials submitted by respondent, we conclude that respondent failed to fulfill its initial burden of demonstrating what is a critical element in this aspect of the case—that there was no policeman in the store. If a policeman were present, we think it would be open to a jury, in light of the sequence that followed, to infer from the circumstances that the policeman and a Kress employee had a ‘meeting of the minds' and thus reached an understanding that petitioner should be refused service. Because ‘(o)n summary judgment the inferences to be drawn from the underlying facts contained in (the moving party’s) materials must be viewed in the light most favorable to the party opposing the motion,’ we think respondent’s failure to show there was no policeman in the store requires reversal.

Pointing to Rule 56(e),1818 … respondent argues that it was incumbent on petitioner to come forward with an affidavit properly asserting the presence of the policeman in the store, if she were to rely on that fact to avoid summary judgment. Respondent notes in this regard that none of the materials upon which petitioner relied met the requirements of Rule 56(e).1919

This argument [while true] does not withstand scrutiny, however, for … the burden of the moving party under Rule 56(c) [is] to show initially the absence of a genuine issue concerning any material fact. … And, in a comment directed specifically to a contention like respondent’s, the Committee stated that ‘(w)here the evidentiary matter in support of the motion does not establish the absence of a genuine issue, summary judgment must be denied even if no opposing evidentiary matter is presented’ [italics added]. Because respondent did not meet its initial burden of establishing the absence of a policeman in the store, petitioner here was not required to come forward with suitable opposing affidavits.

If respondent had met its initial burden by, for example, submitting affidavits from the policemen denying their presence in the store at the time in question, Rule 56(e) would then have required petitioner to have done more than [effectively to] simply rely on the contrary allegation in her complaint. To have avoided conceding this fact for purposes of summary judgment, petitioner would have had to come forward with either (1) the affidavit of someone who saw the policeman in the store or (2) an affidavit under Rule 56(f) explaining why at that time it was

18 18 …‘When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If he does not so respond, summary judgment, if appropriate, shall be entered against him.’19 19 Petitioner’s statement at her deposition, see n. 13, supra, was, of course, hearsay; and the statement of

Miss Sullivan, see n. 14, supra, was unsworn. And, the rule specifies that reliance on allegations in the complaint is

not sufficient.

Page 72 of 201

impractical to do so. Even though not essential here to defeat respondent’s motion, the submission of such an affidavit would have been the preferable course for petitioner’s counsel to have followed. As one commentator has said:

It has always been perilous for the opposing party neither to proffer any countering evidentiary materials nor file a 56(f) affidavit. And the peril rightly continues…. Yet the party moving for summary judgment [nevertheless] has the burden to show that he is entitled to judgment under established principles; and if he does not discharge that burden then he is not entitled to judgment [because the burden cannot be shifted to the adverse party]. No defense to an insufficient showing is required.

. . .

The judgment of the Court of Appeals is reversed, and the case is remanded to that court for further proceedings [i.e., trial] consistent with this opinion.

It is so ordered.

. . .

Mr. Justice Black, concurring in the judgment.

. . .

Summary judgments may be granted only when ‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue [now “dispute”] as to any material fact….’ Fed.Rule Civ.Proc. 56(c). …

The existence or nonexistence of a conspiracy is essentially a factual issue that the jury, not the trial judge, should decide. In this case petitioner may have had to prove her case by impeaching the store’s witnesses and appealing to the jury to disbelieve all that they said was true in the affidavits. The right to confront, cross-examine and impeach adverse witnesses is one of the most fundamental rights sought to be preserved by the Seventh Amendment provision for jury trials in civil cases. The advantages of trial before a live jury with live witnesses, and all the possibilities of considering the human factors, should not be eliminated by substituting trial by affidavit and the sterile bareness of summary judgment. ‘It is only when the witnesses are present and subject to cross-examination that their credibility and the weight to be given their testimony can be appraised. Trial by affidavit is no substitute for trial by jury which so long has been the hallmark of ‘even handed justice.’

. . .

Page 73 of 201

Mr. Justice Brennan, concurring in part and dissenting in part [provided for historical perspective].

. . .

Title 42 U.S.C. s[ection] 1983 derives from s[ection] 1 of the Civil Rights Act of 1871 entitled, ‘An Act to enforce the Provisions of the Fourteenth Amendment to the Constitution of the United States, and for other Purposes.’ The 1871 Act, popularly known as the ‘Ku Klux Klan Act,’ was, as its legislative history makes absolutely clear, a response to the outrages committed by the Klan in many parts of the South.

. . .

Stirred to action by the wholesale breakdown of protection of civil rights in the South, Congress carried to completion the creation of a comprehensive scheme of remedies—civil, criminal, and military1616—for the protection of constitutional rights from all major interference.

. . .

The history of this scheme of remedies for the protection of civil rights was, until very recently, one of virtual nullification by this Court. Key provisions were declared unconstitutional or given an unduly narrow construction wholly out of keeping with their purposes.

. . .

Notes and Questions:

1. On what evidence did the court’s analysis focus? Was it the plaintiff’s complaint? May the pleadings be considered? If so, what role do they play?

2. Rule 56 envisions the respective parties submitting affidavits for, and in opposition to, summary judgment. Here, Ms. Adikes did not have any (trial rules of evidence) admissible affidavits to submit in opposition to Kress’s motion. So why did the Supreme Court reverse the trial court’s granting of summary judgment?

3. Justice Black’s concurring opinion states: “The existence or nonexistence of a conspiracy is essentially a factual issue that the jury, not the trial judge, should decide.” Does this mean that conspiracy cases can never be decided via summary judgment?

4. A case may turn upon the motive of the one or more of the parties. Success in such an action would then require proof that the defendant intended to deprive the plaintiff of her civil rights. FRCP 56(c)(4) requires that affidavits be based on personal knowledge. If you were the

16 16 The military remedy, designed to become available when the other remedies were inadequate, was created by s[ection] 3 of the 1871 Act, now 10 U.S.C. s[ection] 333. …

Page 74 of 201

lawyer for plaintiff Adikes—and alleging an intent to deprive your client of her civil rights, i.e., to impede her from freely associating with her students—would you have been able to produce an affidavit attesting to the personal knowledge of the Kress manager, or police, as to their motive for the arrest? If you took their depositions, and they said that they did not intend to so deprive Ms Adikes of her rights, would those sworn statements thus entitle the defendant to summary judgment?

Page 75 of 201

CELOTEX CORP. v. CATRETTUnited States Supreme Court

477 U.S. 317 (1986)

Justice Rehnquist delivered the [5-4 majority] opinion of the Court.

The United States District Court for the District of Columbia granted the motion of petitioner Celotex Corporation for summary judgment against respondent Catrett because the latter was unable to produce evidence in support of her allegation in her wrongful-death complaint that the decedent had been exposed to petitioner’s asbestos products. A divided panel of the Court of Appeals for the District of Columbia Circuit reversed, however, holding that petitioner’s failure to support its motion with evidence tending to negate such exposure precluded the entry of summary judgment in its favor [italics added]. We … now reverse the decision of the District of Columbia Circuit.

Respondent commenced this lawsuit … alleging that the death in 1979 of her husband, Louis H. Catrett, resulted from his exposure to products containing asbestos manufactured or distributed by 15 named corporations. Respondent’s complaint sounded in negligence, breach of warranty, and strict liability. … [T]he remaining 13 [dendants], including petitioner, filed motions for summary judgment. Petitioner’s motion … argued that summary judgment was proper because respondent had “failed to produce evidence that any [Celotex] product ... was the proximate cause of the injuries alleged…” In particular, petitioner noted that respondent had failed to identify, in answering interrogatories specifically requesting such information, any witnesses who could testify about the decedent’s exposure to petitioner’s asbestos products. In response to petitioner’s summary judgment motion, respondent then produced three documents which she claimed “demonstrate that there is a genuine material factual dispute” as to whether the decedent had ever been exposed to petitioner’s asbestos products. The three documents included a transcript of a deposition of the decedent, a letter from an official of one of the decedent’s former employers whom petitioner planned to call as a trial witness, and a letter from an insurance company to respondent’s attorney, all tending to establish that the decedent had been exposed to petitioner’s asbestos products in Chicago during 1970-1971. Petitioner, in turn, argued that the three documents were inadmissible hearsay and thus could not be considered in opposition to the summary judgment motion.

… The [trial] court explained that it was granting petitioner’s summary judgment motion because “there [was] no showing that the plaintiff was exposed to the defendant Celotex’s product in the District of Columbia or elsewhere within the statutory period.” … The majority of the Court of Appeals held that petitioner’s summary judgment motion was rendered “fatally defective” by the fact that petitioner “made no effort to adduce any evidence, in the form of affidavits or otherwise, to support its motion.” According to the majority, Rule 56(e) of the

Page 76 of 201

Federal Rules of Civil Procedure, and this Court’s decision in Adickes v. S.H. Kress & Co., establish that “the party opposing the motion for summary judgment bears the burden of responding only after the moving party has met its burden of coming forward with proof of the absence of any genuine issues of material fact.” ... The dissenting judge argued that “[t]he majority errs in supposing that a party seeking summary judgment must always make an affirmative evidentiary showing, even in cases where there is not a triable, factual dispute.” According to the dissenting judge, the majority’s decision “undermines the traditional authority of trial judges to grant summary judgment in meritless cases.”

We think that the position taken by the majority of the Court of Appeals is inconsistent with the standard for summary judgment set forth in Rule 56(c) of the Federal Rules of Civil Procedure. Under Rule 56(c), summary judgment is proper “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” In our view, the plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial. In such a situation, there can be “no genuine issue as to any material fact,” since a complete failure of proof concerning an essential element of the nonmoving party’s case necessarily renders all other facts immaterial. The moving party is “entitled to a judgment as a matter of law” because the nonmoving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof....

Of course, a party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,” which it believes demonstrate the absence of a genuine issue of material fact. But unlike the Court of Appeals, we find no express or implied requirement in Rule 56 that the moving party support its motion with affidavits or other similar materials negating the opponent’s claim. On the contrary, Rule 56(c), which refers to “the affidavits, if any” … suggests the absence of such a requirement. And if there were any doubt about the meaning of Rule 56(c) in this regard, such doubt is clearly removed by Rules 56(a) and (b), which provide that claimants and defendants, respectively, may move for summary judgment “ with or without supporting affidavits….” The import of these subsections is that, regardless of whether the moving party accompanies its summary judgment motion with affidavits, the motion may, and should, be granted so long as whatever is before the district court demonstrates that the standard for the entry of summary judgment, as set forth in Rule 56(c), is satisfied. One of the principal purposes of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses, and we think it should be interpreted in a way that allows it to accomplish this purpose.

Page 77 of 201

Respondent argues, however, that Rule 56(e), by its terms, places on the nonmoving party the burden of coming forward with rebuttal affidavits, or other specified kinds of materials, only in response to a motion for summary judgment “made and supported as provided in this rule.” According to respondent’s argument, since petitioner did not “support” its motion with affidavits, summary judgment was improper in this case. But as we have already explained, a motion for summary judgment may be made pursuant to Rule 56 “with or without supporting affidavits.”a In cases like the instant one, where the nonmoving party will bear the burden of proof at trial on a dispositive issue, a summary judgment motion may properly be made in reliance solely on the “pleadings, depositions, answers to interrogatories, and admissions on file.” Such a motion, whether or not accompanied by affidavits, will be “made and supported as provided in this rule,” and Rule 56(e) therefore requires the nonmoving party to go beyond the pleadings and by her own affidavits, or by the “depositions, answers to interrogatories, and admissions on file,” designate “specific facts showing that there is a genuine issue for trial.”

. . .

The Court of Appeals in this case felt itself constrained, however, by language in our decision in Adickes v. S.H. Kress & Co. There we held that summary judgment had been improperly entered in favor of the defendant restaurant in an action brought under 42 U.S.C. § 1983. In the course of its opinion, the Adickes Court said that “both the commentary on and the background of the 1963 amendment conclusively show that it was not intended to modify the burden of the moving party ... to show initially the absence of a genuine issue concerning any material fact.” We think that this statement is accurate in a literal sense, since we fully agree with the Adickes Court that the 1963 amendment to Rule 56(e) was not designed to modify the burden of making the showing generally required by Rule 56(c). It also appears to us that, on the basis of the showing before the Court in Adickes, the motion for summary judgment in that case should have been denied. But we do not think the Adickes language quoted above should be construed to mean that the burden is on the party moving for summary judgment to produce evidence showing the absence of a genuine issue of material fact, even with respect to an issue on which the nonmoving party bears the burden of proof. Instead, as we have explained, the burden on the moving party may be discharged by “showing”—that is, pointing out to the district court—that there is an absence of evidence to support the nonmoving party’s case.

The last two sentences of Rule 56(e) were added, as this Court indicated in Adickes, to disapprove a line of cases allowing a party opposing summary judgment to resist a properly made motion by reference only to its pleadings. While the Adickes Court was undoubtedly correct in concluding that these two sentences were not intended to reduce the burden of the moving party, it is also obvious that they were not adopted to add to that burden. Yet that is exactly the result which the reasoning of the Court of Appeals would produce; in effect, an amendment to Rule 56(e) designed to facilitate the granting of motions for summary judgment

a a The current version of Rule 56 does not include this language.

Page 78 of 201

would be interpreted to make it more difficult to grant such motions. Nothing in the two sentences themselves requires this result, for the reasons we have previously indicated, and we now put to rest any inference that they do so.

. . .

Respondent commenced this action in September 1980, and petitioner’s motion was filed in September 1981. The parties had conducted discovery, and no serious claim can be made that respondent was in any sense “railroaded” by a premature motion for summary judgment. Any potential problem with such premature motions can be adequately dealt with under Rule 56(f), which allows a summary judgment motion to be denied, or the hearing on the motion to be continued, if the nonmoving party has not had an opportunity to make full discovery.

The Federal Rules of Civil Procedure have for almost 50 years authorized motions for summary judgment upon proper showings of the lack of a genuine, triable issue of material fact. Summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed “to secure the just, speedy and inexpensive determination of every action.” Before the shift to “notice pleading” accomplished by the Federal Rules,b motions to dismiss a complaint or to strike a defense were the principal tools by which factually insufficient claims or defenses could be isolated and prevented from going to trial with the attendant unwarranted consumption of public and private resources. But with the advent of “notice pleading,” the motion to dismiss seldom fulfills this function any more, and its place has been taken by the motion for summary judgment. Rule 56 must be construed with due regard not only for the rights of persons asserting claims and defenses that are adequately based in fact to have those claims and defenses tried to a jury, but also for the rights of persons opposing such claims and defenses to demonstrate in the manner provided by the Rule, prior to trial, that the claims and defenses have no factual basis.

The judgment of the Court of Appeals is accordingly reversed, and the case is remanded for further proceedings consistent with this opinion.

It is so ordered.

. . .

Justice Brennan, with whom The Chief Justice and Justice Blackmun join, dissenting.

… The Court clearly rejects the ruling of the Court of Appeals that the defendant must provide affirmative evidence disproving the plaintiff’s case. Beyond this, however, the Court has not clearly explained what is required of a moving party seeking summary judgment on the ground that the nonmoving party cannot prove its case. This lack of clarity is unfortunate: district courts must routinely decide summary judgment motions, and the Court’s opinion will very b b Given the Iqbal pleadings directive (plausible, not just possible claim), the Court has presumably made summary judgment an even more welcomed arrow in the litigation quiver.

Page 79 of 201

likely create confusion. For this reason, even if I agreed with the Court’s result, I would have written separately to explain more clearly the law in this area. However, because I believe that Celotex did not meet its burden of production under Federal Rule of Civil Procedure 56, I respectfully dissent from the Court’s judgment.

I

Summary judgment is appropriate where the Court is satisfied “that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.Rule Civ.Proc. 56(c).c The burden of establishing the nonexistence of a “genuine issue” is on the party moving for summary judgment. …This burden has two distinct components: an initial burden of production [i.e., affidavits, etc.] , which shifts to the nonmoving party if satisfied by the moving party; and an ultimate burden of persuasion [i.e., whether there is a genuine dispute], which always remains on the moving party. The court need not decide whether the moving party has satisfied its ultimate burden of persuasion2 unless and until the Court finds that the moving party has discharged its initial burden of production. Adickes v. S.H. Kress & Co.; 1963 Advisory Committee’s Notes on Fed.Rule Civ.Proc. 56(e).

The burden of production imposed by Rule 56 requires the moving party to make a prima facie showing that it is entitled to summary judgment. The manner in which this showing can be made depends upon which party will bear the burden of persuasion on the challenged claim at trial. If the moving party [Celotex] will bear the burden of persuasion at trial, that party must support its motion with credible evidence—using any of the materials specified in Rule 56(c)—that would entitle it to a directed verdict if not controverted at trial. Such an affirmative showing [only then] shifts the burden of production to the party opposing the motion and requires that party either to produce evidentiary materials that demonstrate the existence of a “genuine issue” for trial or to submit an affidavit requesting additional time for discovery.

If the burden of persuasion at trial would be on the non-moving party [Cartett], the party moving for summary judgment may satisfy Rule 56’s burden of production in either of two ways. First, the moving party may submit affirmative evidence that negates an essential element of the nonmoving party’s claim [italics added]. Second, the moving party may demonstrate to the Court that the nonmoving party’s evidence is insufficient to establish an essential element of the nonmoving party’s claim [italics added]. If the nonmoving party cannot muster sufficient

c c Rule 56(c) later substituted “dispute” for “issue.” This was supposedly a non-substantive editorial change. 2 2 The burden of persuasion imposed on a moving party by Rule 56 is a stringent one. Summary judgment should not be granted unless it is clear that a trial is unnecessary, and any doubt as to the existence of a genuine issue for trial should be resolved against the moving party, Adickes v. S.H. Kress & Co. In determining whether a moving party has met its burden of persuasion, the court is obliged to take account of the entire setting of the case and must consider all papers of record as well as any materials prepared for the motion. … [Thus,] “[i]f ... there is any evidence in the record from any source from which a reasonable inference in the [nonmoving party’s] favor may be drawn, the moving party simply cannot obtain a summary judgment....”

Page 80 of 201

evidence to make out its claim, a trial would be useless and the moving party is entitled to summary judgment as a matter of law.

Where the moving party adopts this second option and seeks summary judgment on the ground that the nonmoving party—who will bear the burden of persuasion at trial—has no evidence, the mechanics of discharging Rule 56’s burden of production are somewhat trickier. Plainly, a conclusory assertion that the nonmoving party has no evidence is insufficient. … Such a “burden” of production is no burden at all and would simply permit summary judgment procedure to be converted into a tool for harassment. Rather, as the Court confirms, a party who moves for summary judgment on the ground that the nonmoving party has no evidence must affirmatively show the absence of evidence in the record [italics added]. This may require the moving party to depose the nonmoving party’s witnesses or to establish the inadequacy of documentary evidence. If there is literally no evidence in the record, the moving party may demonstrate this by reviewing for the court the admissions, interrogatories, and other exchanges between the parties that are in the record. Either way, however, the moving party must affirmatively demonstrate that there is no evidence in the record to support a judgment for the nonmoving party.

. . .

II

I do not read the Court’s opinion to say anything inconsistent with or different than the preceding discussion. My disagreement with the Court concerns the application of these principles to the facts of this case.

Defendant Celotex sought summary judgment on the ground that plaintiff had “failed to produce” any evidence that her decedent had ever been exposed to Celotex asbestos. Celotex supported this motion with a two-page “Statement of Material Facts as to Which There is No Genuine Issue” and a three-page “Memorandum of Points and Authorities” which asserted that the plaintiff had failed to identify any evidence in responding to two sets of interrogatories propounded by Celotex and that therefore the record was “totally devoid” of evidence to support plaintiff's claim.

Approximately three months earlier, Celotex had filed an essentially identical motion. Plaintiff responded to this earlier motion by producing three pieces of evidence which she claimed “[a]t the very least ... demonstrate that there is a genuine factual dispute for trial:” (1) a letter from an insurance representative of another defendant describing asbestos products to which plaintiff’s decedent had been exposed; (2) a letter from T.R. Hoff, a former supervisor of decedent, describing asbestos products to which decedent had been exposed; and (3) a copy of decedent’s deposition from earlier workmen’s compensation proceedings. Plaintiff also apparently indicated at that time that she intended to call Mr. Hoff as a witness at trial.

Page 81 of 201

Celotex subsequently withdrew its first motion for summary judgment. However, as a result of this motion, when Celotex filed its second summary judgment motion, the [full] record did contain evidence—including at least one witness—supporting plaintiff’s claim. Indeed, counsel for Celotex admitted to this Court at oral argument that Celotex was aware of this evidence and of plaintiff’s intention to call Mr. Hoff as a witness at trial when the second summary judgment motion was filed. Moreover, plaintiff’s response to [the] Celotex’ second motion pointed to this evidence—noting that it had already been provided to counsel for Celotex in connection with the first motion-and argued that Celotex had failed to “meet its burden of proving that there is no genuine factual dispute for trial.”

. . .

Notes and Questions:……………………………………… 1. Why did the District of Columbia Circuit [intermediate appellate court] hold that summary judgment against Mrs. Catrett was improper? The Supreme Court’s ensuing reversal means that there are now two methods for achieving summary judgment in federal court—exemplified by Adikes and Celotex. What are they?

2. Would the result have been the same, if the Celotext motion had been made, say, six to nine months earlier (i.e., several months after plaintiff filed her lawsuit)? As noted in Greater Baltimore Center for Pregnancy Concerns, Inc. v. Mayor and City Council of Baltimore,

721 F.3d 264, 280 (2013):

Chief among its errors was the district court's award of summary judgment to the Center without allowing the City any discovery. As a general proposition, “summary judgment is appropriate only after ‘adequate time for discovery.’” Discovery is usually essential in a contested proceeding prior to summary judgment because “[a] party asserting that a fact ... is genuinely disputed must support the assertion by,” inter alia, “citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations ..., admissions, interrogatory answers, or other materials.” Fed.R.Civ.P. 56(c)(1)(A). Obviously, “by its very nature, the summary judgment process presupposes the existence of an adequate record.” A district court therefore “must refuse summary judgment ‘where the nonmoving party has not had the opportunity to discover information that is essential to [its] opposition.’”

Page 82 of 201

3. As the majority notes, summary judgment is “regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole.” Compare California case law—a less hospitable environment: “Because summary judgment is a drastic measure that deprives the losing party of trial on the merits, it may not be invoked unless it is clear from the declarations that there are no triable issues of material fact [italics added]. Any doubts about the propriety of granting a summary judgment motion must be resolved in favor of the party opposing the motion. Courts must abide by the strong public policy favoring disposition on the merits over judicial efficiency.” Johnson v. Superior Court, 143 Cal.App.4th 297, 304 (2006).

Page 83 of 201

MCCANTS V. FORD MOTOR CO., INC.United States Court of Appeals, Eleventh Circuit

781 F.2d 855 (1986)

Hill, Circuit Judge [delivered the unanimous opinion of the court]:

This case is before the court on defendant-appellant Ford Motor Company’s appeal from an order of the district court dismissing plaintiff-appellee Reta McCants’ suit without prejudice pursuant to Rule 41(a)(2) of the Federal Rules of Civil Procedure [italics added].

FACTS

Appellee Reta McCants, administratrix of the estate of Johnny McCants, deceased, commenced this suit against appellant Ford Motor Company in federal district court in Alabama. The action arose out of an accident in which appellee’s decedent, a member of the United States Army Reserve, was killed while riding in a military jeep on a two week active duty training mission. The accident occurred in Mississippi, and the complaint sought damages under Mississippi products liability law.

The decedent was killed on July 24, 1982. Appellee filed suit against A.M. General, the company she believed had manufactured the military jeep in question, on July 20, 1983. Appellee maintains that she subsequently learned through discovery that appellant [Ford] rather than A.M. General manufactured the jeep, and she sought leave to amend her action to substitute appellant as party defendant. Instead of allowing the amendment, the district court denied her motion to amend and dismissed the suit without prejudice. Appellee then filed this [subsequent] action, naming appellant [Ford] as defendant, on November 14, 1983 [more than one year after the accident].

Discovery began in December of 1983 and continued through most of the following year. In January of 1985 the district court issued an order granting plaintiff-appellee’s motion that the case be dismissed without prejudice. Although the action had been pending for more than a year, during which time considerable activity had taken place, the district court declined to attach any conditions to its order of dismissal.

Appellant argues on this appeal that the dismissal without prejudice and the failure to attach conditions were an abuse of the district court’s discretion.

DISCUSSION

I. The Dismissal Without Prejudice

Page 84 of 201

Rule 41(a)(2) allows a plaintiff, with the approval of the court, to dismiss an action voluntarily and without prejudice to future litigation at any time. The rule provides in relevant part as follows:

Except as provided in paragraph (1) of this subdivision of this rule [concerning dismissal by stipulation or by plaintiff prior to answer or motion for summary judgment], an action shall not be dismissed at the plaintiff’s instance save upon order of the court and upon such terms and conditions as the court deems proper ... Unless otherwise specified in the order, a dismissal under this paragraph is without prejudice.

The purpose of the rule “is primarily to prevent voluntary dismissals which unfairly affect the other side, and to permit the imposition of curative conditions.” Thus a district court considering a motion for dismissal without prejudice should bear in mind principally the interests of the defendant, for it is the defendant’s position that the court should protect.

As we have noted previously, however, in most cases a [voluntary] dismissal should be granted unless the defendant will suffer clear legal prejudice, other than the mere prospect of a subsequent lawsuit, as a result. Thus it is no bar to a voluntary dismissal that the plaintiff may obtain some tactical advantage over the defendant in future litigation. Rather, the district court must exercise its broad equitable discretion under Rule 41(a)(2) to weigh the relevant equities and do justice between the parties in each case, imposing such costs and attaching such conditions to the dismissal as are deemed appropriate. Dismissal on motion of the plaintiff pursuant to Rule 41(a)(2) is within the sound discretion of the district court, and its order may be reviewed only for an abuse of discretion.

In this case, appellant argues it will suffer plain legal prejudice as a result of the district court’s dismissal without prejudice, as it will lose the complete defense it claims it is afforded by the applicable statute of limitations in Alabama. Appellee, as well as the [Alabama federal] district court in which she originally filed, apparently assumed that either the six year statute of limitations applicable to wrongful death actions under Mississippi law or the two year statute applicable to wrongful death actions in Alabama would be used to determine the timeliness of her suit. As the case developed, however, and the parties dedicated further research to the legal issues involved, it became clear that a very strong argument could be made for the application of the general one year statute of limitations applicable to actions not otherwise specifically provided for in other sections of the Alabama code.

Appellant did not plead the one year statute of limitations in its original answer to the complaint. The issue first appears in the record in an amended answer filed July 18, 1984, in which it was simply stated that appellee’s claims were barred by the applicable statute of

Page 85 of 201

limitations. Appellant then filed a motion for summary judgment on the basis of the one year statute on August 24, 1984; the district court denied that motion the day before it granted appellee’s motion for dismissal without prejudice. Although no opinion accompanied the district court’s denial of the motion for summary judgment, appellant argues that the district court, in its denial of the summary judgment motion, must have erroneously determined the one year statute of limitations to be inapplicable. Appellant thus argues not only that it suffered legal prejudice in that it lost the statute of limitations defense when the case was dismissed without prejudice, but that the district court abused its discretion when it failed even to acknowledge that important fact in its balancing of the equities.

. . .

The parties have not yet agreed on the statute of limitations applicable to this suit, as brought in Alabama, although appellant argues persuasively that Alabama’s one year statute would apply. Appellee essentially argues her case on this appeal on the basis of the assumption that Alabama’s one year statute bars the suit as brought in Alabama, and that a similar suit would not be time-barred in Mississippi, where appellee now intends to sue. We, too, will assume without deciding that the one year Alabama statute bars this [second] suit as filed, but that it could be refiled in Mississippi under the statute of limitations applicable there. We thus must determine whether it constitutes an abuse of discretion for a district court to dismiss without prejudice an action that is time-barred as brought, where the purpose or effect of such dismissal is to allow the plaintiff to refile the action in a place or manner in which it is not similarly barred.

Only a few reported cases are on point. [Citations omitted] … Thus, what little authority that exists on this particular question suggests that the likelihood that a dismissal without prejudice will deny the defendant a statute of limitations defense does not constitute plain legal prejudice and hence should not alone preclude such a dismissal.

. . .

“On proper motion,” … “the complaint may be dismissed without prejudice upon such terms and conditions as the court deems proper.” In that [omitted] case, as in this one, the plaintiff’s untimeliness yielded the defendant a potentially great legal advantage, had the case proceeded to final judgment, that the defendant presumably would not have enjoyed in a subsequent lawsuit on the same facts. … [W]e find no evidence in the record to suggest that appellee or her counsel acted in bad faith in filing this action in Alabama or in filing it more than one year after the accident occurred. Under the circumstances, we cannot find appellant to have suffered any plain legal prejudice other than the prospect of a second [or third] lawsuit on the same set of facts. The district court thus did not abuse its discretion in granting the dismissal without prejudice in this case.

. . .

Page 86 of 201

II. The Refusal to Attach Conditions

Appellant argues that if the district court did not abuse its discretion in dismissing the action without prejudice, it should have at least imposed certain costs and attached certain conditions to the dismissal [italics added]. Appellant claims the district court should have conditioned the dismissal on the payment by appellee of full compensation for the considerable time and effort it claims it wasted in defending this action. Further, appellant argues that the district court should have imposed non-monetary conditions that would have the effect of insuring that appellant retains the benefits it claims it is due under the terms of a discovery order with which appellee apparently failed to comply [italics added]. According to appellant, under the clear terms of an order of the district court in this litigation, appellee would not have been able to call any expert witnesses at trial if this case had not been dismissed, because she failed to furnish to appellant certain information the court ordered her to furnish concerning the expert witnesses she intended to call at trial. According to appellant, it should be permitted to retain the benefits of the sanction thereby imposed in any subsequent litigation.

A plaintiff ordinarily will not be permitted to dismiss an action without prejudice under Rule 41(a)(2) after the defendant has been put to considerable expense in preparing for trial, except on condition that the plaintiff reimburse the defendant for at least a portion of his expenses of litigation. Costs may include all litigation-related expenses incurred by the defendant, including reasonable attorneys’ fees. Where a subsequent similar suit between the parties is contemplated, expenses awarded might be limited to those incurred in discovering information and researching and pressing legal arguments that will not be useful in the later suit. We have also noted previously that a dismissal without prejudice pursuant to Rule 41(a)(2) may be conditioned upon the satisfaction of other non-monetary conditions designed to alleviate the prejudice the defendant might otherwise suffer.

Appellant assures us, and appellee does not dispute, that appellant opposed the motion for dismissal without prejudice filed by appellee … three days before appellant’s motion for summary judgment was set to be heard, and that appellant asked that any dismissal of the action without prejudice include the imposition of specified conditions designed to alleviate the prejudice appellant would otherwise suffer. … [But ] the district court did not explicitly rule on appellant’s request, instead simply denying it by implication by failing to impose or discuss any conditions when the dismissal without prejudice was ordered.

As a result, the record now before this court is insufficient to allow us to evaluate the district court’s exercise of its discretion in [implicitly] rejecting appellant’s request for the attachment of conditions to its order dismissing the case. It is clear that discovery had proceeded and that interrogatories had been served, objected to, and answered to some extent. Depositions had been taken. Appellant had obviously incurred considerable litigation expense. Just how much of the work done by appellant in this case was wasted and how much will be useful in further litigation in Mississippi is not clear. While appellee does not concede that her suit in

Page 87 of 201

Alabama is barred by the statute of limitations, it is apparent that appellant’s position on the statute of limitations motivated the motion for dismissal without prejudice. As the record makes clear, however, the parties were aware of the statute of limitations problem long before appellee filed the motion to dismiss that was granted by the district court. The district court judge is in a far better position than we are to weigh and advise us concerning the equities … that militate for and against the imposition of the various conditions appellant claims are due. We simply cannot properly evaluate the district court’s exercise of its discretion in this regard without the benefit of some record of the factors it took into consideration in reaching its decision. We thus remand the case, with instructions as indicated below, for further proceedings in the district court. …

CONCLUSION

For the reasons set forth above, we VACATE the district court’s order dismissing this case without prejudice and REMAND the case to the district court for further proceedings not inconsistent with this opinion. On remand, the district court is instructed to rule on appellant’s request that conditions be attached to any dismissal of this case without prejudice, and to state the findings and conclusions that lead the court to arrive at the decision it reaches in that regard. The district court may hold further hearings to aid it in determining the conditions that may be appropriate if it so desires. The court need not do so, however, if it finds the current record sufficient to allow it to prepare the order it deems appropriate. During the remand, we will retain jurisdiction over this appeal. …

Notes and Questions:

1. FRCP Rule 41(a)(1) authorizes the plaintiff’s voluntary dismissal, without judicial involvement. Under FRCP 41(a)(2), however, a plaintiff’s voluntary dismissal is dismissed “on terms that the court deems proper.” What is the essential difference between subsection (1) and (2)?

2. Did the likelihood of a subsequent lawsuit in Mississippi—aka 11th-hour forum shopping—bar the plaintiff’s voluntary dismissal? Should it have done so? What would be the arguments for and against?

3. What were the two conditions Ford asserted, when arguing that the trial court abused its discretion (by not imposing those conditions when granting plaintiff’s voluntary dismissal)? If you were the judge, would you have ruled the same way—and, as to both defense requests?

4. How did the appellate court deal with the silent record (on whether the trial court actually took defendant’s extensive costs into consideration), when granting the plaintiff’s voluntary dismissal motion?

Page 88 of 201

5. For the factors normally considered during discretionary voluntary dismissal motions, see Colon-Cabrera v. Esso Standard Oil Co., Inc., 723 F.3d 82, at 88 (1st Cir., 2013).

Voluntary dismissal under Rule 41(a)(2) is conditioned on court permission “to protect the nonmovant from unfair treatment.” Such unfairness can take numerous forms, including “the defendant’s effort and expense of preparation for trial, excessive delay and lack of diligence on the part of the plaintiff in prosecuting the action, insufficient explanation [of] the need to take a dismissal, and the fact that a [dispositive] motion for summary judgment has been filed by the defendant.” For example, it is appropriate to consider whether “a party proposes to dismiss the case at a late stage of pretrial proceedings, or seeks to avoid an imminent adverse ruling.” A plaintiff should not be permitted to force a defendant to incur substantial costs in litigating an action, and then simply dismiss his own case and compel the defendant to litigate a wholly new proceeding.

Page 89 of 201

U.S. S.E.C. v. SHEHYN

United States District Court, Southern District, New York2005 WL 2990643, not reported in F.R.D./F.Supp. (2005)

OPINION & ORDER

Mukasey, J.

The Securities and Exchange Commission (“SEC”) sues defendant Rodney S. Shehyn (“Shehyn”), along with co-defendants … for violations of … the Securities Act of 1933…; the Securities Exchange Act of 1934…; and Rule 10b-5 thereunder. … Shehyn moves to dismiss all of the claims against him for improper service under Fed.R.Civ.P. 4(m). … For the reasons set forth below, Shehyn’s motion to dismiss is denied and the SEC’s time to serve Shehyn is extended nunc pro tunc to July 23, 2004.

I.

On March 15, 2004, the SEC filed a complaint against Shehyn and the other named defendants alleging numerous violations of the federal securities laws…. The details of the scheme are not relevant for the purposes of Shehyn’s motion; it suffices to say that Shehyn was alleged to have orchestrated … fraudulent operations through offices in Spain and California over the course of more than two years.

On July 13, 2004—the 120th day after the SEC filed its complaint—the SEC moved to extend its time to serve Shehyn to July 23. In its motion, the SEC explained that Shehyn had pleaded guilty in January 2004 to a different … scheme and had been incarcerated at a federal detention facility in San Diego. However, when the SEC attempted to serve Shehyn at the San Diego facility at some point before July 13, it was told that he was “in transit” to a different facility. On June 29, the SEC learned that this new facility was located in Taft, California, and spent “several days” trying to reach the correct person at the facility with whom to arrange service. That person had been reached by the time of the SEC’s July 13 [extension] motion, leading the SEC to conclude that service could be completed that week. Shehyn was successfully served at the Taft facility on July 20, within the ten day period requested by the July 13 motion. The motion itself was never ruled on by this court.

On September 8, 2004, Shehyn moved to dismiss the SEC’s complaint based on the SEC’s failure serve him within 120 days as required by Fed.R.Civ.P. 4(m).

II.

Fed.R.Civ.P. 4(m) provides that “[i]f service of the summons and complaint is not made upon a defendant within 120 days after the filing of the complaint, the court, upon motion or on its own initiative after notice to the plaintiff, shall dismiss the action without prejudice....”

Page 90 of 201

However, the rule also provides that “the court shall extend the time for service for an appropriate period” if the plaintiff can show “good cause” for the failure to meet the 120-day deadline. (Emphasis added [by court.]) Such an extension may be granted nunc pro tunc and is often coupled with a denial of a defendant’s motion to dismiss under … [Rule 12].

Although Fed.R.Civ.P. 4(m) does not spell out what constitutes “good cause,” courts in this district have required a plaintiff to “demonstrate that despite diligent attempts, service could not be made due to exceptional circumstances beyond his or her control.” “An attorney’s ignorance of the rules, inadvertence, neglect, or mistake do not constitute good cause.”

In evaluating “good cause,” courts examine whether the plaintiff has made reasonable efforts to effect service and whether the defendant has been prejudiced by the delay. In addition to these two factors, several courts have considered also whether the plaintiff moved for an extension before the 120-day period elapsed. An examination of all three factors suggests that the SEC has demonstrated “good cause” for the seven-day delay in serving Shehyn.

First, the SEC’s efforts to serve Shehyn in a timely manner were “reasonable.” More than two weeks before the 120-day period elapsed, the SEC attempted to serve Shehyn at the federal detention facility in San Diego. Upon learning that Shehyn was “in transit” to another facility and confirming that this facility was in Taft, California, the SEC spent “several days” trying to reach the proper person at Taft with whom to arrange service. When it finally was able to reach this prison official near the end of the 120-day period, it served Shehyn promptly with the summons and complaint. These facts demonstrate diligence and suggest that circumstances largely beyond the SEC’s control—Shehyn’s transfer to another facility, the need to coordinate service with a prison official at the new facility, and the delay of “several days” in reaching this prison official—were responsible for the failure to meet the 120-day deadline. Ultimately, the SEC served Shehyn only a week after the deadline, the sort of brief delay that courts repeatedly have found to be consistent with a “good cause” finding.

Second, Shehyn offers no evidence that he was prejudiced by the one-week delay in receiving the complaint. Instead, he argues only that the court “is within its power and authority to grant a dismissal” and that he is “entitled to [it].” The lack of any allegation of prejudice also militates against granting Shehyn’s motion.

Third, the SEC sought to extend its time to serve under Fed.R.Civ.P. 4(m) before the 120-day period expired. Specifically, on July 13, 2004, the SEC moved for an additional 10 days to complete the coordination of service with the prison official at the Taft facility. Although the SEC’s motion was submitted on the last day of the 120-day period, the court surmises that the SEC likely did not recognize the need for extra time until after it took “several days” to reach the appropriate prison official at Taft. In any event, the court could find “good cause” even if the SEC had not moved for the extension in the first place. See, e.g., Geller (noting that it would be

Page 91 of 201

“prudent” for a party to move for an extension prior to the running the of 120 days, but “the failure to do so does not mandate dismissal”).

This court’s conclusion that the SEC has demonstrated “good cause” is reinforced by numerous cases that have found “good cause” when the defendant’s whereabouts are unknown or otherwise difficult to discern. In Westerfield, for example, the SEC claimed “good cause” where it served the defendant 18 days late because it was having “considerable difficulty” locating the defendant and was able to serve him only “on back roads on Kentucky Lake” after it had received new information about his location. 1997 WL 282241, at 2. The Court found that the SEC’s efforts to locate the defendant were “reasonable,” extended the 120-day service period by 18 days, and denied the defendant’s motion to dismiss for failure to comply with Fed.R.Civ.P. 4(m). Id. at *3. Similarly, the Court in McNeill excused a 31-day delay and rejected a defendant’s motion to dismiss where the plaintiff was unable to locate the defendant’s agent for process within 120 days because a state website did not designate the correct agent for service. McNeill, 2004 WL 1207912, at 1; see also Geller [above] (denying motion to dismiss based on 14-day delay where plaintiff made “extensive inquiries” before finally locating defendant outside state); Coleman, 202 F.R.D. at 108-09 (denying motion to dismiss based on three-week delay where defendant was not alleged to have evaded service, but had been unsuccessfully sought at three different Florida addresses). Although none of these cases presents a situation identical to the one here, all point to a finding of “good cause” where, as here, the plaintiff struggles to locate and serve the defendant due to circumstances largely beyond the plaintiff’s control.

Because the SEC has shown “good cause” for its delay in serving Shehyn, the court need not consider whether a discretionary extension is appropriate pursuant to its inherent authority under Fed.R.Civ.P. 4(m). See Advisory Committee Notes (1993 Amendments) (stating that Fed.R.Civ.P. 4(m) “authorizes the court to relieve a plaintiff of the consequences of an application of [Rule 4(m) ] even if there is no good cause shown” ) (emphasis added [by court]); Feingold, 269 F.Supp.2d at 277 (outlining and applying four-factor test to determine whether discretionary extension was appropriate)….

For the reasons set forth above, Shehyn’s motion to dismiss is denied and the SEC’s time to serve Shehyn is extended nunc pro tunc to July 23, 2004 [date of service].

SO ORDERED.

Notes and Questions:

1. If you were the SEC lawyer, what would you have done differently—with a view toward avoiding Shehyn’s motion?

Page 92 of 201

2. What factors influence FRCP 4(m)’s “good cause” applications? Does good cause have to be shown to obtain an extension?

3. Was the trial judge too lenient in the good cause exception to the facts of this case? Should a judge always be lenient? What are the arguments you could generally make—for and against such leniency?

Page 93 of 201

AURA LAMP & LIGHTING INC. V. INTERNATIONAL TRADING CORPORATIONUnited States Court of Appeals, Seventh Circuit

325 F.3d 903 (2003)

Ilana Diamond Rovner, Circuit Judge [delivered the unanimous opinion of the court].

The district court dismissed this case for want of prosecution and the plaintiff, Aura Lamp & Lighting Inc. (“Aura Lamp”), appeals. …

I.

Because the district court dismissed the case for want of prosecution and for violations of discovery orders, the salient facts are few. Aura Lamp and International Trading Corporation (“ITC”) allegedly entered into a number of contracts relating to lighting products and their components. The details of these agreements are unnecessary to the resolution of this appeal. … Aura Lamp filed the complaint on April 6, 2000. A few weeks later, the district court ordered Aura Lamp to amend its complaint by May 19, 2000 to cure jurisdictional defects related to certain diversity jurisdiction allegations in the complaint. That date came and went without any amendment to the complaint by Aura Lamp. ITC then moved to dismiss the complaint or in the alternative to transfer the case. The district court set a briefing schedule, ordering Aura Lamp to reply by July 5, 2000. Again the date passed without any action by Aura Lamp. ITC complied with the district court’s scheduling order by filing its reply brief even though no responsive brief had been filed by Aura Lamp. Aura Lamp then belatedly filed a response brief which the district court accepted over ITC’s objection. The district court denied the motion to dismiss, ordered Aura Lamp once again to amend its complaint to cure the jurisdictional defect and threatened dismissal if Aura Lamp continued to ignore the court’s orders. Aura Lamp then amended the complaint.

On December 21, 2000, the court ordered the close of written discovery by March 21, 2001 and the close of all other discovery by August 1, 2001. Approximately one week later [after the discovery order], ITC served interrogatories, document requests and requests for admission on Aura Lamp. Under the Federal Rules of Civil Procedure, Aura Lamp was to respond to this discovery within thirty days. The thirty days passed without a response from Aura Lamp and without any request for an extension of time to respond. Numerous calls and letters from ITC’s counsel followed, and Aura Lamp failed to meet two agreed extension dates. ITC then moved to compel discovery, asking that the requests for admission be deemed admitted, and also seeking sanctions. The case was scheduled for a status conference on March 22, 2001, and the court took up the motion to compel at that time. When asked to explain the delays in responding to discovery, Aura Lamp’s counsel replied that he was solely responsible for the case, stating, “I wish I had somebody else to go through this stuff.” He explained that his client was a “one-man

Page 94 of 201

operation” that did not have the resources to sort through the documents requested. Over ITC’s objection, the district court elected to grant one final extension to Aura Lamp, allowing counsel for Aura Lamp to pick the date on which all discovery was to be produced. Several times during the status conference, the court threatened dismissal of the case if Aura Lamp failed to meet the deadline. (“I'll set a deadline, if the case [sic] isn’t met, the case is going away.”); (“I want to set a date that is going to be real so that if it isn’t met, I’m going to take severe action in this case.”); (“Due to the amount of time it’s taken the plaintiff to respond to these discovery requests, and given the enormous amount of time I’m giving you to respond over the objection of the defendants, if there is not good faith compliance by that date, I am going to seriously consider a motion to dismiss for want of prosecution.”). (“I'm going to have to take some severe action.”); (“[I]f I set a deadline, given all that's transpired, it’s going to have to be it.”); (“I’m setting a deadline, and I want it to be a real deadline, and I want there to be consequences if it isn’t followed.”). Aura Lamp’s counsel asked to set the deadline to the last working day in April, amounting to an additional one and a half month extension. Shortly thereafter, ITC served a second set of document requests on Aura Lamp.

On the very last day of April 2001, Aura Lamp served ITC with responses that ITC characterized as incomplete and defective. According to ITC, Aura Lamp failed to produce a single page of documents and filed specious objections to both the document and interrogatory requests. Aura Lamp filed no response to ITC’s second request for the production of documents. ITC’s counsel again tried to resolve the matter with a letter requesting compliance. When Aura Lamp did not respond, ITC moved to dismiss the case for repeated violations of court orders, failure to comply with discovery, and failure to prosecute. On June 15, 2001, the court held a status hearing on the motion. Counsel for Aura Lamp informed the court he wanted to reply to the motion in writing and that he intended to file two motions of his own. Remarkably (given the tenor of the prior hearing), he intended to move to extend time to propound the plaintiff’s discovery requests and also for additional time to respond to ITC’s request for the production of documents. After setting out a deadline for Aura Lamp to file these new motions and briefing schedules for all pending motions, the court set a hearing date of July 11, 2001.

At the July 11 hearing, the court learned that, in addition to missing several other deadlines, Aura Lamp had failed to comply with the briefing schedule set on June 15. Counsel for Aura Lamp explained that the most recent delays were due to secretarial difficulties, computer problems, and scheduling challenges posed by an ongoing trial in chancery court. He insisted that his conduct was not wilful and wanton but rather due to unforeseen circumstances beyond his control. The district court replied, “I don’t think I have to find wilful and wanton” [to impose sanctions]. Ultimately, the court found that Aura Lamp repeatedly missed court-ordered deadlines and failed to prosecute the case. She noted that Aura Lamp had been granted numerous extensions both by the court and by counsel for ITC to no avail. Aura Lamp had also failed to follow basic court procedures by failing to sign many of the documents filed with the court. The court concluded, “[Y]ou brought the case, and the plaintiff has to prosecute a case when they

Page 95 of 201

bring it, and the plaintiff hasn’t. And I think to allow this to go on anymore would just compound all the problems that have occurred by really doing something that’s unfair to the defendants.” The court then dismissed the case for want of prosecution and denied all other motions as moot. Aura Lamp appeals.

II.

On appeal, Aura Lamp maintains that the district court erred in dismissing the case under Federal Rule of Civil Procedure 37 because that rule requires a finding of wilful and wanton misconduct, and the court thus applied the wrong standard. Aura Lamp also contends that dismissal under Rule 37 or Rule 41 requires specific warnings prior to dismissal and also requires that the court consider lesser sanctions before dismissing. Aura Lamp argues that the court’s warnings were inadequate and that no lesser sanctions were considered before the court dismissed the case. Before we attend to the merits of Aura Lamp’s appeal, we must address a question raised by ITC at oral argument.

A.

. . .

Having determined that the [Washington, D.C.] Federal Circuit has [national] jurisdiction over the [patent] appeal [in this case, rather than the otherwise appropriate local appellate court] and that we necessarily lack jurisdiction, we are left with a single question. We must decide whether to dismiss the case or, in the interest of justice, transfer it to the Federal Circuit. ITC urges us to dismiss rather than transfer the case. At this stage of the proceedings, we may “take a peek” at the merits because whether the appeal has any possible merit bears significantly on our decision to transfer or dismiss the appeal. We may do so even though we lack jurisdiction to decide the merits.

B.

ITC moved to dismiss the complaint with prejudice “pursuant to Fed.R.Civ.Proc. 37(d) and/or 41(b).” The district judge ultimately dismissed the case for want of prosecution pursuant to Rule 41(b) but she also discussed and may have relied upon Aura Lamp’s violations of orders related to discovery. In an abundance of caution we will therefore address Aura Lamp’s Rule 37 arguments as well. As we concluded above, we may consider the consequences of transfer before deciding whether to transfer. “[T]here is no reason to raise false hopes and waste judicial resources by transferring a case that is clearly doomed[.]” Here, because the case was dismissed for want of prosecution and violations of discovery orders, the district court’s ruling rests on procedural matters not unique to patent law. The ruling would thus be reviewed under the law of our own circuit. In our Circuit, we review for abuse of discretion the district court’s decision to sanction a plaintiff by dismissing a suit. Our review of a dismissal for want of prosecution is highly deferential [to the trial judge’s decision]. In order to find an abuse of discretion, the

Page 96 of 201

district court’s decision must strike us as fundamentally wrong. ([W]e are obligated to affirm the dismissal unless it is clear that no reasonable person could concur in the trial court’s assessment).

Certain principles guide the district court in determining whether to dismiss a case for want of prosecution pursuant to Rule 41. Ideally, the district court should consider the frequency and magnitude of the plaintiff’s failure to comply with deadlines for the prosecution of the suit, the apportionment of responsibility for those failures between the plaintiff and his counsel, the effect of those failures on the judge’s calendar and time, the prejudice if any to the defendant caused by the plaintiff’s dilatory conduct, the probable merits of the suit, and the consequences of dismissal for the social objectives of the type of litigation that the suit represents. “There is no ‘grace period’ before dismissal for failure to prosecute … and no requirement of graduated sanctions, but there must be an explicit warning before the case is dismissed.” Aura Lamp asks us to find the district court abused its discretion in dismissing the case because (1) the court did not adequately warn Aura Lamp that the case would be dismissed; (2) the court failed to consider whether lesser sanctions would be effective; (3) Aura Lamp’s violations were not of sufficient frequency or magnitude to warrant dismissal; (4) in apportioning the fault between the parties, the district court should have found that ITC’s conduct was responsible for more egregious delays than Aura Lamp’s; (5) neither the court nor the defendant suffered prejudice due to Aura Lamp; (6) Aura Lamp’s claims are meritorious.

We begin with the issue of warning. The district judge is not obliged to warn the plaintiff repeatedly nor is the court required to issue a formal rule to show cause before dismissing a case. “A judge is not obliged to treat lawyers like children.” All that is required is explicit warning. Here, the court repeatedly and expressly warned Aura Lamp that it was contemplating dismissal during the March 22 status conference. (“I'll set a deadline, if the case [sic] isn’t met, the case is going away.”); (“I want to set a date that is going to be real so that if it isn’t met, I’m going to take severe action in this case.”); (“Due to the amount of time it’s taken the plaintiff to respond to these discovery requests, and given the enormous amount of time I’m giving you to respond over the objection of the defendants, if there is not good faith compliance by that date, I am going to seriously consider a motion to dismiss for want of prosecution.”). This is by no means a complete list of the court’s warnings but is merely a representative sample. These warnings are more than adequate. Aura Lamp was on notice of the consequences of further failures to respond to the court’s orders.

Aura Lamp also faults the court for failing to consider the efficacy of lesser sanctions first. Although we recommend that courts consider sanctioning a misbehaving lawyer before the sanction of dismissal is imposed on a possibly faultless plaintiff, we do not require that courts do so. At the July 11 hearing, as the court was ruling on the motion to dismiss, counsel for Aura Lamp asked the court to allow him to resign from the case and find someone else who could handle the case properly. The court replied that it was too late for such a maneuver. The district judge acknowledged that both counsel and his client had difficulties in prosecuting the case but that ultimately the plaintiff was responsible for prosecuting the case and had failed to do so.

Page 97 of 201

Clearly the court believed this was the only effective sanction at the time. Especially in light of counsel’s earlier admission that his client was a “one-man operation” without the resources to respond to discovery, it would appear that the court did not abuse its discretion in refusing to impose lesser sanctions. ([Citation omitted: where a pattern of dilatory conduct is clear, dismissal need not be preceded by the imposition of less severe sanctions).

Aura Lamp next argues that its violations were not sufficiently egregious and were too infrequent to warrant such a harsh sanction. This claim is easily answered by merely listing the violations. In addition to failing to sign pleadings filed with the court, Aura Lamp repeatedly missed court-imposed deadlines for both discovery and motion practice, ignored agreed extensions, and failed to amend its complaint to cure a jurisdictional defect for several months after the court ordered it do so. Moreover, Aura Lamp asked permission to propound discovery on the defendant after the court-ordered discovery cut-off date, a date that Aura Lamp’s counsel had himself selected at the court’s invitation. We have upheld dismissals in cases where the violations were comparable to or less severe than they are here, and no court would find an abuse of discretion in these circumstances.

Aura Lamp maintains that ITC caused at least some of the delay. But in apportioning the fault between Aura Lamp and ITC, Aura Lamp offers no valid evidence of dilatory conduct by ITC that contributed to any of Aura Lamp’s failures. The sum and substance of Aura Lamp’s argument on this point is that ITC did not tell Aura Lamp’s counsel that his extraordinarily late responses to discovery were evasive and incomplete. Aura Lamp also complains that ITC did not contact its counsel concerning responses to ITC’s request for production of documents. Aura Lamp claims it made the documents available for inspection and ITC did not take advantage of the opportunity to review them. However, Aura Lamp fails to mention that ITC specifically requested that Aura Lamp photocopy the documents and forward them to ITC. This argument is frivolous. So too is Aura Lamp’s claim that neither the court nor the defendant suffered any prejudice at its hands. The district court specifically listed the motions that ITC was forced to bring to protect its interests in the case, adding needless expense to the case and clogging the court’s docket. We conclude that this is not a close question. On the Rule 41 [lack of prosecution] issues, the appeal is doomed and need not be transferred to the Federal Circuit.

There is no more [additional] merit to Aura Lamp’s Rule 37 argument. The only issue here is whether the court applied the wrong standard when it dismissed the case without expressly finding that Aura Lamp’s conduct was wilful and wanton. We [but not the language of Rule 37] have held that when a court enters a default judgment as a discovery sanction, the court must find that the party against whom sanctions are imposed displayed wilfulness, bad faith or fault. Although we strongly encourage courts to make this finding explicitly, we may infer it, if necessary, from the sanction order itself. The court here stated that it did not need to find “wilful and wanton” conduct, and that is correct. “Wilful and wanton” implies a more culpable level of conduct than wilful. Aura Lamp has cited no case applying Rule 37 (and we could find none) requiring a court to find that a plaintiff has acted in a wilful and wanton fashion before the court

Page 98 of 201

may impose the sanction of dismissal. Indeed, some of our cases suggest the court need not find even wilfulness. … We will presume for the purposes of this appeal that the court was required to find at least a wilful violation of discovery orders before dismissing a case. Evidence of the court’s implicit finding on wilfulness appears in its final remarks before dismissing the case:

I don’t want to hear any more argument. I can’t bend over anymore. I just think that yes, there may have been excuses for what happened in April, but you can’t look at excuses for what happened in April when you’re trying to find excuses for what happened in January, February and March. And it’s just inadequate. I mean, I don’t even have to deal with the fact that I’m getting all these things from the clerk’s office telling me that you’re not complying with the basic rules of filing documents, like signing it. I mean, you don’t need a word processor to sign a document.

The court thus found that Aura Lamp had no adequate excuse for its repeated failures to comply with discovery for a period of at least three months. Indeed, Aura Lamp had failed to propound discovery on the defendant as of July 2001, more than a year after filing the case. This serves as evidence both of failure to prosecute the case and failure to comply with discovery orders. The court’s palpable exasperation with the plaintiff is more than sufficient to infer a finding of wilfulness. The court did not abuse its discretion in granting the sanction of dismissal for Aura Lamp’s repeated, unexplained failures to comply with discovery orders.……………………… III. We conclude that we should dismiss the case rather than transfer it to the Federal Circuit. Under the deferential standards the Federal Circuit would employ to review a dismissal under Rules 37 and 41, Aura Lamp would not prevail. The appeal is “clearly doomed” and there is no reason to waste judicial resources or the resources of the parties by transferring the case. The appeal is therefore ……………………………………………………………………………….. DISMISSED.

Notes and Questions:

1. Recall the Shehyn (other) involuntary dismissal case. There, the court authorized additional time for the plaintiff to serve an incarcerated defendant, who had been transferred. Here, in Aura, the court was not as lenient—ultimately dismissing the case for a lack of prosecution at the discovery stage. Courts are generally less lenient, when exercising their discretion in the latter type of delay in prosecution cases. Does this difference make sense? It actually does, but can you determine the reason for this difference?

2. As the Aura court states: “both counsel and his client had difficulties in prosecuting the case but that ultimately the plaintiff was responsible for prosecuting the case and had failed to do so.” Is this a case where the sins of the lawyer were unfairly attributed to the client? On the other

Page 99 of 201

hand, can a plaintiff dodge the responsibility of diligently prosecuting his case? Would it matter of the plaintiff were in pro per? A sophisticated litigant?

3. The former requirement—that here be an express finding of a “willful” failure to comply with a court order (for dismissal/answer striking sanctions)—was removed from Rule 37 in the 1970 Amendments to the FRCP.

4. The Sixth Circuit raised the point that it did not have jurisdiction over this appeal (Part II.A.).

(a) Did it therefore overstep its authority to act, by nevertheless dismissing this case—with prejudice—which precluded P’s refiling?

(b) Aura could not refile its case in the trial court. It had to appeal the dismissal. As Rule 41(b) provides: “a dismissal under this subdivision (b) and any dismissal not under this rule [e.g., Rule 37]—except one for lack of jurisdiction, improper venue, or failure to join a party under Rule 19—operates as an adjudication on the merits.” The court states that it could have transferred this appeal to the Federal Circuit. The Sixth Circuit chose, instead, to affirm the dismissal. In doing so, the Sixth Circuit reasoned: “we may ‘take a peek’ at the merits because whether the appeal has any possible merit bears significantly on our decision to transfer or dismiss the appeal. We may do so even though we lack jurisdiction to decide the merits.” Notwithstanding P’s multiple failures to comply with its discovery obligations, was the Sixth Circuit’s failure to transfer the appeal to the proper appellate court a violation of the principle that a federal court cannot act without jurisdiction to do so? Is its Part III conclusion—that Aura’s case is “‘clearly doomed’ and there is no reason to waste judicial resources or the resources of the parties by transferring the case”—a satisfactory rationale?

5. Courts generally do not look for ways to dismiss a case, when there has been but one misstep—as articulated in the following passage:

[A] district court commits a legal error when it dismisses a suit “immediately after the first problem, without exploring other options or saying why they would not be fruitful.” ... [¶] The district court dismissed Sroga’s case too abruptly and without consideration of “essential factor[s],” such as the frequency and egregiousness of the plaintiff’s failure to comply with deadlines, the effect of delay on the court’s calendar, and the prejudice resulting to the defendants. ... [W]e require more than just a standalone warning to ensure that the punishment “fit[s] the crime.” Generally a single missed deadline or status hearing does not support dismissal for want of prosecution.

Page 100 of 201

Sroga v. Huberman, 722 F.3d 980, 982–983 (2013). There are various factors a court applies when deciding a post-service motion to dismiss for lack of diligent prosecution. For example, in Carpenter v. City of Flint, 723 F.3d 700, at 704 (6th Cir., 2013): “Under this court’s precedent, we consider four factors when determining whether dismissal for failure to prosecute was within the district court’s discretion:

(1) whether the party’s failure is due to willfulness, bad faith, or fault; (2) whether the adversary was prejudiced by the dismissed party’s conduct; (3) whether the dismissed party was warned that failure to cooperate could lead to dismissal; and (4) whether less drastic sanctions were imposed or considered before dismissal of the action.”

Page 101 of 201

GREENUP v. RODMAN

Supreme Court of California

42 Cal.3d 822 (1986)

Professor’s Note: We discussed default judgment earlier, typically referred to as a “true” default. We now address default judgment again, in its application as a “penalty” default.

The following California Supreme Court opinion presents the later type of default, in a very teachable context—which also better prepares you for trial practice. Greenup also yields a good sense of the important distinction between the two types of default judgment, and a federal procedure comparison. California’s version of the FRCP 55 default rule is found in CCP §580. The hotly contested issue (on the California Supreme Court) is whether the latter code section governs both types of default. Make this difference the focus of your reading (rather than the state-federal differences mentioned in Greenup).

Court’s Opinion: Mosk, Associate Justice [delivered the 6-1 opinion of the court].As a sanction for wilful and deliberate refusal to obey discovery orders,

the trial court in this case struck the answer and entered a default judgment in an amount exceeding the prayer of the complaint. We granted review to consider whether a default judgment entered as a discovery sanction is excepted from the general rule that “if there be no answer” filed, the plaintiff’s relief “cannot exceed that which he shall have demanded in his complaint ....” (Code Civ. Proc., § 580.) We conclude that in all default judgments the demand sets a ceiling on recovery.

Plaintiff filed a complaint in August 1980 against Dale W. Rodman, individually and as majority shareholder of Rodair, Inc. and sole shareholder of Rodman Aviation, Inc., and against Rodman Aviation. She alleged that defendant Rodman had used involuntary dissolution procedures to transfer assets fraudulently from Rodair, Inc., in which she held a 20 percent minority interest, to Rodman Aviation, a corporation solely owned by Rodman. Charging fraud and conspiracy to defraud, concealment of assets, breach of fiduciary duty, conversion, and intentional infliction of emotional distress, plaintiff claimed damages “in a sum that exceeds the jurisdictional requirements of this court.” In her prayer, however, the only specific sum requested was $100,000 in exemplary and punitive damages: all other damages were to be “subject to proof at time of trial” or “as the court deems just.”

Following unsuccessful demurrers, defendants answered and plaintiff

Page 102 of 201

commenced discovery. Rodman was recalcitrant throughout this process, actively resisting both document production and deposition. After repeated failures to appear and numerous postponements, he appeared at a deposition on February 12, 1981, rescheduled at his request, only to refuse to answer questions because it was Lincoln’s Birthday—assertedly a “legal holiday.” At a June 1981 deposition, on a court order to appear with records at the office of plaintiff’s counsel, Rodman produced an assortment of papers in a box filled with straw and horse excrement, which he laughingly dumped on the table. After counsel and the court reporter had inspected the documents for an hour, Rodman announced they must be sure to wash their hands thoroughly because the straw had been treated with a toxic chemical readily absorbed through the skin. The reporter, five months pregnant, asked to be excused, and the session was terminated by plaintiff’s counsel. On November 6, 1981, plaintiff moved to strike the answer and enter a default judgment. The court ordered defendants to pay $1,000 in sanctions (adding $500 to an earlier sanction that Rodman had failed to pay) and to appear at the office of plaintiff’s counsel with the requested documents on December 23, 1981. When Rodman again refused to comply, plaintiff renewed her motion, demanding that a default be entered. On August 24, 1982, the court granted plaintiff’s motion to strike the answer and enter a default. However, it was not until September 24, 1982—i.e., a month after the default had been entered—that she filed a request to enter a default judgment (Cal. Rules of Court, rule 982(a)(6)), stating for the first time the amount of damages she claimed. After several continuances at plaintiff’s request, an ex parte “prove-up” hearing was held. Plaintiff put on evidence in support of her claim of damages; defendants were not present either in person or by counsel. The court found defendants liable for $338,000 in compensatory damages and $338,000 in punitive damages, and entered judgment in the amount of $676,000. Defendants appealed, contending inter alia that the court lacked jurisdiction to award damages in an amount exceeding the prayer. Holding this default for discovery violations exempt from the limit on damages in default judgments set by the code, the Court of Appeal affirmed the judgment.

ISection 580, and related sections … aim to ensure that a defendant who

declines to contest an action does not thereby subject himself to open-ended liability. Reasoning that a default judgment that exceeds the demand would effectively deny a fair hearing to the defaulting party, the Courts of Appeal have consistently read the code to mean that a default judgment greater than the amount specifically demanded is void as beyond the court’s jurisdiction.

… We held that the primary purpose of the section is to guarantee

Page 103 of 201

defaulting parties adequate notice of the maximum judgment that may be assessed against them. As we observed, “The notice requirement of section 580 was designed to insure fundamental fairness. Surely, this would be undermined if the door were opened to speculation, no matter how reasonable it might appear in a particular case, that a prayer for damages according to proof provided adequate notice of a defaulting defendant’s potential liability.” … [T]he Courts of Appeal have insisted that due process requires formal notice of potential liability; actual notice may not substitute for service of an amended complaint. Nevertheless, plaintiff here maintains that the court acted within its jurisdiction in granting her increased award. She first argues that the terms of her complaint amply notified defendants of the extent of damages she would claim. While conceding that she omitted to state an amount of damages in her demand for judgment as section 425.10, subdivision (b), requires, she points to the usual inconsequence of such error. It is true that a general demurrer will not lie for a defective prayer alone. And in the ordinary case in which the litigation proceeds to trial, such a deficiency would carry no adverse consequences: the plaintiff would be permitted liberal amendment to the prayer to conform to proof. Furthermore, section 580 specifically provides that the court is not bound by the demand of the complaint, but may award any relief consistent with the case made by the plaintiff. …………………………………………………………………… It is precisely when there is no trial, however, that formal notice, and therefore the requirement of section 425.10, become critical. Notice is at the heart of the provision, as the Legislature underscored by adding section 425.11, which provides that in the single instance in which the amount of damages shall not be specified in the complaint–an action for personal injury—”the plaintiff shall give notice to the defendant of the amount of special and general damages sought” before obtaining a default judgment. It would undermine this concern for due process to allow the judgment herein to stand despite plaintiff’s failure to meet the requirements of sections 425.10 or 425.11. Plaintiff’s more substantive claim, and the central issue before us, is that the foregoing limits on default judgments do not, either as a matter of statutory language or policy, apply in the present context. She concedes that section 580 governs the judgment even when, pursuant to section 2034 [now CCP § 2023], subdivision (b)(2)(C), a court strikes an answer and enters a default judgment for refusal to make discovery. She would construe the language of section 580, however, to permit unlimited damage judgments when an answer is stricken as a discovery sanction. She asserts that the first clause of the section—i.e., “The relief granted to the plaintiff, if there be no answer, cannot exceed that which he shall have demanded in his complaint”—applies only to “ordinary” defaults, presumably defaults at the pleading stage. And she concludes that when, as here, a default is entered after the defendant has filed his answer, the judgment falls

Page 104 of 201

within the more liberal rule of the second clause of section 580, i.e., “but in any other case, the Court may grant [the plaintiff] any relief consistent with the case made by the complaint and embraced within the issue.” ……………………………………………. In effect, plaintiff maintains that defendants entered irreversibly into an adversarial contest by filing a sufficient answer; having crossed that threshold, they may no longer claim the protection of section 580. In this way, plaintiff attempts to exclude answers stricken for discovery violations from the long line of precedents viewing a failure to answer as including the case in which an answer is filed but is later stricken by the court. We are unpersuaded. The rationale stated in Brown, i.e., that striking the answer renders it a nullity (see Brown… 149 Cal.App.3d 732, 736], applies equally when the answer is stricken pursuant to section [2023]. It is true that sections 586, 585, and 580, which together govern default judgments, do not explicitly list answers stricken pursuant to section [2023] as proceedings in which default judgment is rendered “as if the defendant had failed to answer....” (§ 586.) Yet unless and until the Legislature specifically provides a separate procedure for defaults after discovery sanctions, these sections remain the sole statutory procedures for default judgments. Indeed, in the present case the ex parte prove-up hearing was conducted pursuant to section 585, subdivision (b). We conclude that the damages awarded must be limited by the terms of the same section: when an answer is stricken as a sanction for the defendant’s obstruction of discovery, it is as if no answer had been filed in the first instance. …………………… Arguing that default judgments entered for discovery violations should be held to differ fundamentally from other defaults as a matter of policy, plaintiff cites to the minority of federal cases that have upheld judgments exceeding the demand of the complaint. Plaintiff stresses that these holdings were reached despite statutory language more absolute than section 580: rule 54(c) of the Federal Rules of Civil Procedure requires that “A judgment by default shall not ... exceed in amount that prayed for in the demand for judgment.” ………………………………………………………………….. Certainly these holdings give bite to discovery sanctions in cases in which the defendant’s own actions obstructed the plaintiff from fixing the amount of damages to which he was entitled. But while unlimited discretion to award such default judgments might further the policy behind discovery sanctions, our paramount concern remains due process. Plaintiff overlooks a crucial difference between state and federal procedures in default judgments: … federal defendants who default are entitled to a minitrial on the sole issue of damages. Unlike the ex parte hearing provided for by section 585, the hearing in federal court is a full-

Page 105 of 201

fledged adversarial contest.2 ……………………….. It is here that plaintiff’s analogy to federal law—and her contention that merely by filing an answer defendants have irreversibly contested this action–breaks down: under section 585 there is no contest whatever once a defendant defaults. We conclude that due process requires notice to defendants, whether they default by inaction or by wilful obstruction, of the potential consequences of a refusal to pursue their defense. Such notice enables a defendant to exercise his right to choose–at any point before trial, even after discovery has begun–between (1) giving up his right to defend in exchange for the certainty that he cannot be held liable for more than a known amount, and (2) exercising his right to defend at the cost of exposing himself to greater liability. To this end, … “[t]he rules governing default judgment provide the safeguards which ensure that defendant’s choice is a fair and informed one.” ………………………………………… Plaintiff contends that defendants deliberately thwarted her discovery efforts because they believed they owed an actual debt to her in excess of her demand. Yet this is no less true of many defendants who fail to answer in the first instance. As we emphasized in Becker [27 Cal.3d 489], no matter how reasonable an assessment of damages may appear in the specific case, we cannot open the door to speculation on this subject without undermining due process—a protection to which every defendant is entitled, even one as obstreperous and as guilty of reprehensible conduct as this defendant. …………………. II Because the default judgment in this case exceeded the ceiling on damages to which plaintiff is subject, we conclude that the award must be amended to conform to the limitations specified in section 580. Defendants argue that because plaintiff stated no amount of damages in her prayer, she is entitled to no compensatory damages whatever. In Becker, however, we specifically held that the allegations of a complaint may cure a defective prayer for damages. …………………………………………………………… Each of plaintiff’s causes of action, with the exception of her personal injury claim, concluded with the allegation that she suffered damage “in an amount that exceeds the jurisdictional requirements of this court.” Plaintiff brought her action in the Los Angeles Superior Court, which is a court of limited jurisdiction subject to the requirement that the amount in controversy exceed $15,000.a By her allegations, plaintiff thus gave sufficient notice to defendants

2 2 We are equally unpersuaded by defendants’ attempt to use federal majority interpretation of rule 54(c) to support their contention that our discovery statutes must be read as conforming to the federal statutes on which they were modeled. Because the language and procedure of our code differs so markedly from the federal rule, federal case law and policy are at best suggestive on this point.

a a The referenced amount was the then-current demarcation between California’s Superior and Municipal Court jurisdiction. That amount is now

Page 106 of 201

that she claimed at least $15,000 in compensatory damages. While an award in excess of $15,000 would be improper, a judgment in that amount was within the jurisdiction of the court. The compensatory award should therefore be reduced to the extent that it exceeds $15,000. Even as so modified, the judgment will clearly support an award of punitive damages. We need not, therefore, reach defendants’ contention that an award of punitive damages cannot stand if there is no compensatory damage award. For the reasons given, however, the award of punitive damages must be reduced to the amount of $100,000 pleaded in the complaint. ………………………………………………………………. III We recognize that the damages thus authorized may not fully compensate plaintiff for her loss. Because this case appears to be the first reported decision to hold that a default judgment entered as a discovery sanction is governed by the general rule that such a judgment cannot exceed the relief demanded in the complaint, both plaintiff and the trial court may have been unaware that the deficiency in her prayer could have been corrected in the same way as in cases of default for failure to answer, i.e., by giving plaintiff the option of serving and filing an amended complaint. ……………………….. In the interest of fairness plaintiff should now be given that option. Specifically, she should be allowed to choose to forego the reduced award prescribed herein and instead to file an amended complaint praying for a different amount of damages and/or other appropriate relief. If she so elects, she must serve her amended complaint on defendants, who will be entitled to file a new answer; all issues will then be at large, including liability. Of course, if defendants thereafter continue to disobey discovery orders and incur a second default judgment as a sanction, plaintiff will have the right, at a second ex parte hearing, to prove her actual damages up to the limits of her amended prayer. The judgment of the Court of Appeal is reversed with directions to modify the judgment of the trial court in accord with Part II of this opinion and to affirm the judgment as modified, unless within 30 days after issuance of our remittitur plaintiff serves and files in the Court of Appeal a notice electing the option set forth in Part III of this opinion. In that event, the Court of Appeal shall reverse the judgment of the trial court with directions to allow plaintiff to exercise that option. In either event the parties shall bear their own costs on appeal.

Bird, Chief Justice, concurring and dissenting.I write separately to express a concern that has been overlooked by the

majority. Civil defendants who wish to limit their liability to the minimum

$25,000+.

Page 107 of 201

amount specifically pleaded can (1) force plaintiffs to undergo the frustration and expense of discovery, and then (2) absent themselves allowing a default to be entered. This is exactly what happened here. ……………………………………………………………………………. . . .

Witkin notes, “C.C.P. 580 provides that if the defendant answers the court may grant ‘any relief consistent with the case made by the complaint and embraced within the issue,’ and the rule is well settled that in a contested case the plaintiff may secure relief different from or greater than that demanded.”

. . .Although the majority acknowledge the fact that the statutory scheme

does not address this situation, they insist that due process requires a “strict construction of section 580. ...” However, this interpretation would mandate the application of the damage ceiling to actions in which answers are stricken as a discovery sanction. In so doing, the majority expand the parameters of section 580 by incorporating all cases falling within the ambit of section [2023].3

The justification proffered for equating defaults entered at the pleading stage with those resulting from sanctions imposed under section [2023] is the concern that defaulting parties may be denied the formal notice of the maximum amount of potential liability required by due process.

The first clause of section 580 was set down by the Legislature to guarantee defendants adequate notice of the maximum judgment that may be assessed against them. However, it is clear that the statutory language contemplates two different situations.The first clause of section 580 addresses the traditional default context where a defendant has failed to answer. In this situation, fundamental fairness requires that the defendant be notified. The second clause of section 580, by contrast, refers to contested cases. Absent the discovery abuses that occurred here, the defendant would have an opportunity to determine and contest the maximum amount of damages pleaded. In contested cases, therefore, any affirmative action taken by a defendant demonstrates that notice has been received.

In the present proceeding, defendants not only filed an answer to the complaint, they gave both plaintiff and the court the impression that they would participate in the discovery process. For the two-year period between the date plaintiff filed the complaint—August of 1980—and the date the court granted plaintiff’s motion to strike the answer and enter a default—August of 1982—this case was “contested.” …

3 3 Section [2023(b)] empowers the courts to impose sanctions against litigants who wrongfully fail or refuse to participate in the discovery process.

Page 108 of 201

The record demonstrates that during this two-year period defendants had no intention of providing plaintiff with any information through the discovery process. As the majority note, defendant Rodman “actively resist[ed] both document production and deposition.” He repeatedly failed to appear at scheduled meetings and, during the one deposition he chose to attend, engaged in behavior that can only be described as shocking, inhumane, and inexcusable.

In light of these circumstances, I cannot agree with the majority’s conclusion that default judgments entered as a sanction for obstruction of discovery must be treated as if no answer had been filed in the first instance. The policy considerations underlying a decision to uphold judgments exceeding the demand where the defendant’s affirmative actions invite a default judgment are considerably more compelling than the majority allow.

The principal purpose of the ceiling set forth in section 580 is to apprise defendants of their potential liability so that they may evaluate the consequences of exercising their right not to answer. Here, the defendant Rodman has answered and then obstructed the discovery process. In so doing, he prevented the plaintiff fromascertaining the proper amount of damages. If the ceiling on damages is applied to this situation, it would permit the defendants to profit from wrongdoing. ………………… Consider the facts of this case. Defendants answered the complaint, thereby indicating their intention to contest plaintiff’s allegations. The ensuing evasive maneuvers permitted defendants to gauge plaintiff’s case while raising the stakes by forcing her to file expensive and futile discovery motions. When it became clear that plaintiff could not realistically estimate the losses she suffered as a result of the dissolution without defendants’ cooperation, defendants attempted to limit their liability by suddenly withdrawing from the proceedings. ………………………………………. The majority admit that the rule they delineate will undercut the effectiveness of discovery sanctions in cases where, as here, only the defendants know the dollar value of the losses suffered. Nevertheless, they claim that due process mandates such a result. If their concern is proper notice to defendants, I see no reason why plaintiffs must suffer the frustration and expense of refiling their claims so that obstreperous defendants may choose the optimal point at which to drop out of the litigation. The majority’s holding eliminates any remedy for outrageous abuses of the discovery process. …………… To avoid this inequity, I would suggest an alternative procedure. The trial court, at the time it enters the default, would send a notice to the defendant stating that it will consider evidence in support of a claim of damages in an amount exceeding the prayer of the complaint at the scheduled “prove-up”

Page 109 of 201

hearing under section 585. During that proceeding, the defendant would be permitted to present rebuttal evidence. …………… This procedure5 would provide defendants with ample notice of their potential liability and an opportunity to challenge the amount of damages sought. This solution is preferable to that suggested by the majority for it accommodates due process while ensuring the effectiveness of motions to strike answers as sanctions for clear abuses of the discovery process.

. . .

Notes and Questions:

1. There are two types of default (in both the state and federal courts). What is the general procedural distinction between them?

2. Given the defendant’s outrageous conduct, why did the California Supreme Court not let the trial judge’s default stand? Should state or federal courts have more power than provided by the legislative branch of government?

3. Greenup provides a rare glimpse into state and federal procedural differences. If your professor were to cover both procedural systems—when federal casebooks do not provide the materials (and professors do not have the time) to address the thousands of state-federal differences—might you be more confused about what law applies in federal courts? For those of you who will take the California Bar, the upper-division California Civil Procedure course is the place to address such differences in more detail.

4. For the interplay of FRCP 37 (sanctions) and FRCP 55 (default judgments), see Guggenheim Capital, LLC v. Birnbaum, 722 F.3d 444, 451 & 454 (2d Cir., 2013):

When assessing a district court’s exercise of its discretion pursuant to Rule 37, we generally look to “(1) the willfulness of the non-compliant party; (2) the efficacy of lesser sanctions; (3) the duration of the noncompliance; and (4) whether the non-compliant party had been warned” that noncompliance would be sanctioned. . . .

[A] party defaults when he “has failed to plead or otherwise defend” the case at hand [italics added]. Fed.R.Civ.P. 55(a). “We have embraced a broad understanding of the phrase ‘otherwise defend.’ ” [D]efendant failed to

5 5 This procedure would be analogous to that employed in the federal courts in cases where a plaintiff seeks damages exceeding the demand in the complaint.

Page 110 of 201

“otherwise defend” by “failing to appear for a deposition, dismissing counsel, giving vague and unresponsive answers to interrogatories, and failing to appear for trial....”

Page 111 of 201

BEACON THEATRES, INC. v. WESTOVERUnited States Supreme Court

359 U.S. 500 (1959)

Mr. Justice Black delivered the [5-3] opinion of the Court.

Petitioner, Beacon Theatres, Inc., sought by mandamus to require a district judge in the Southern District of California to vacate certain orders alleged to deprive it of a jury trial of issues arising in a suit brought against it by Fox West Coast Theatres, Inc. The Court of Appeals for the Ninth Circuit refused the writ, holding that the trial judge had acted within his proper discretion in denying petitioner’s request for a jury. We granted certiorari, because ‘Maintenance of the jury as a fact-finding body is of such importance and occupies so firm a place in our history and jurisprudence that any seeming curtailment of the right to a jury trial should be scrutinized with the utmost care.’

A former Fox Theater in San Bernardino County, California

Source: <http://www.sbcity.org/images/History/OldFox_1.JPEG>

Reprinted with permission of San Bernardino Historical & Pioneer Society

Fox had asked for declaratory relief against Beacon alleging a controversy arising under the Sherman Antitrust Act, 15 U.S.C. s[ection] 1, 15 U.S.C.A. s[ection] 2, and under the Clayton Act, 15 U.S.C. s[ection] 15, which authorizes suits for treble damages against Sherman Act violators. According to the complaint Fox operates a movie theatre in San Bernardino,

Page 112 of 201

California, and has long been exhibiting films under contracts with movie distributors. These contracts grant if the exclusive right to show ‘first run’ pictures in the ‘San Bernardino competitive area’ and provide for ‘clearance’—a period of time during which no other theatre can exhibit the same pictures. After building a drive-in theatre about 11 miles from San Bernardino, Beacon notified Fox that it considered contracts barring simultaneous exhibitions of first-run films in the two theatres to be overt acts in violation of the antitrust laws. Fox’s complaint alleged that this notification, together with threats of treble damage suits against Fox and its distributors, gave rise to ‘duress and coercion’ which deprived Fox of a valuable property right, the right to negotiate for exclusive first-run contracts. Unless Beacon was restrained, the complaint continued, irreparable harm would result. Accordingly, … its pleading was styled a ‘Complaint for Declaratory Relief,’ [whereby] Fox prayed both for a declaration that a grant of clearance between the Fox and Beacon theatres is reasonable and not in violation of the antitrust laws, and for an injunction, pending final resolution of the litigation, to prevent Beacon from instituting any action under the antitrust laws against Fox and its distributors arising out of the controversy alleged in the complaint. Beacon filed an answer, [and] a counterclaim against Fox…. These denied the threats [claimed by Fox] and asserted that there was no substantial competition between the two theatres, that the clearances granted [by private contract] were therefore unreasonable, and that a conspiracy existed between Fox and its distributors to manipulate contracts and clearances so as to restrain trade and monopolize first-run pictures in violation of the antitrust laws. Treble damages were asked [for in Beacon’s counterclaim] .

Beacon demanded a jury trial of the factual issues in the case as provided by Federal Rule of Civil Procedure 38(b). The District Court, however, viewed the issues raised by the ‘Complaint for Declaratory Relief,’ including the question of competition between the two theatres, as essentially equitable. … [I]t directed that these issues be tried to the court…. A common issue of the ‘Complaint for Declaratory Relief,’ the counterclaim, and the cross-claim was the reasonableness of the clearances granted to Fox, which depended, in part, on the existence of competition between the two theatres. Thus the effect of the action of the District Court could be, as the Court of Appeals believed, ‘to limit the petitioner’s [Beacon’s] opportunity fully to try to a jury every issue which has a bearing upon its treble damage suit.’ …

The District Court’s finding that the Complaint for Declaratory Relief presented basically equitable issues draws no support from the Declaratory Judgment Act, 28 U.S.C. s 2201[a]; Fed.Rules Civ.Proc. 57. That statute, while allowing prospective defendants to sue to establish their nonliability, specifically preserves the right to jury trial for both parties. It follows that if Beacon would have been entitled to a jury trial in a treble damage suit against Fox it cannot be deprived of that right merely because Fox took advantage of the availability of declaratory relief to sue Beacon first. Since the right to trial by jury applies to treble damage suits under the antitrust laws, and is, in fact, an essential part of the congressional plan for making competition rather than monopoly the rule of trade, the Sherman and Clayton Act issues on which Fox sought a declaration were essentially jury questions.

Page 113 of 201

Nevertheless the Court of Appeals refused to upset the order of the district judge. It held that the question of whether a right to jury trial existed was to be judged by Fox’s complaint read as a whole. In addition to seeking a declaratory judgment, the court said, Fox’s complaint can be read as making out a valid plea for injunctive relief, thus stating a claim traditionally cognizable in equity. …[I]t invoked the principle that a court sitting in equity could retain jurisdiction even though later a legal remedy became available. In such instances the equity court had discretion to enjoin the later lawsuit in order to allow the whole dispute to be determined in one case in one court [italics added]. … [T]he Court of Appeals held it was not an abuse of discretion for the district judge … to try the equitable cause first even though this might … prevent a full jury trial of the counterclaim … which … [was] as effectively stopped as by an equity injunction.

. . .

Viewed in this manner, the use of discretion by the trial court … to deprive Beacon of a full jury trial on its counterclaim …, as well as on Fox’s plea for declaratory relief, cannot be justified. Under the Federal Rules the same court may try both legal and equitable causes in the same action. Fed.Rules Civ.Proc. … 2 …. Thus any defenses, equitable or legal, Fox may have to charges of antitrust violations can be raised either in its suit for declaratory relief or in answer to Beacon’s counterclaim. On proper showing, harassment by threats of other suits, or other suits actually brought, involving the issues being tried in this case, could be temporarily enjoined pending the outcome of this litigation. Whatever permanent injunctive relief Fox might be entitled to on the basis of the decision in this case could, of course, be given by the court after the jury renders its verdict [italics added]. In this way the issues between these parties could be settled in one suit giving Beacon a full jury trial of every antitrust issue. By contrast, the holding of the court below … would compel Beacon to split his antitrust case, trying part to a judge and part to a jury.1010 Such a result, which involves … Fox’s own legal claim for declaratory relief as well as of the counterclaim which Beacon was compelled by the Federal Rules to bring,1111 is not permissible.

Our decision is consistent with the plan of the Federal Rules and the Declaratory Judgment Act to effect substantial procedural reform while retaining a distinction between jury and nonjury issues and leaving substantive rights unchanged. … Thus, the justification for equity’s deciding legal issues once it obtains jurisdiction, and refusing to dismiss a case, merely because subsequently a legal remedy becomes available, must be re-evaluated in the light of the liberal joinder provisions of the Federal Rules which allow legal and equitable causes to be brought and resolved in one civil action. … This is not only in accord with the spirit of the Rules and the Act but is required by the provision in the Rules that ‘(t)he right of trial by jury as

1010 Since the issue of violation of the antitrust laws often turns on the reasonableness of a restraint on trade in the light of all the facts, it is particularly undesirable to have some of the relevant considerations tried by one factfinder and some by another.11 11 Fed.Rules Civ.Proc., 13(a).

Page 114 of 201

declared by the Seventh Amendment to the Constitution or as given by a statute of the United States shall be preserved … inviolate.’1616

… As this Court said [citation omitted]: ‘In the Federal courts this (jury) right cannot be dispensed with, except by the assent of the parties entitled to it; nor can it be impaired by any blending with a claim, properly cognizable at law, of a demand for equitable relief in aid of the legal action, or during its pendency.’

. . .

The judgment of the Court of Appeals is reversed.

. . .

Mr. Justice Stewart, with whom Mr. Justice Harlan and Mr. Justice Whittaker concur, dissenting.

… The district judge simply exercised his inherent discretion, now explicitly confirmed by the Federal Rules of Civil Procedure, to schedule the trial of an equitable claim in advance of an action at law. …1 In any event no abuse of discretion is apparent in this case.

The Court of Appeals found that the complaint, although inartistically drawn, contained allegations entitling the petitioner to equitable relief.2, 2, 3

16 16 [As you learned in the Choice of Law segment of this course:] In delegating to the Supreme Court responsibility for drawing up rules, Congress declared that: ‘Such rules shall not abridge, enlarge or modify any substantive right and shall preserve the right of trial by jury as at common law and as declared by the Seventh Amendment to the Constitution.’ 28 U.S.C.A. s[ection] 2072. … 1 1 ... The complaint filed by Fox stated a claim traditionally cognizable in equity. That claim, in brief, was that Beacon had wrongfully interfered with the right of Fox to compete freely with Beacon and other distributors for the licensing of films for first-run exhibition in the San Bernardino area. The complaint alleged that the plaintiff was without an adequate remedy at law and would be irreparably harmed unless the defendant were restrained from continuing to interfere—by coercion and threats of litigation—with the plaintiff’s lawful business relationships.2, 2 Upon motion of Fox the trial judge ordered the original action for declaratory and equitable relief to be

tried separately to the court and in advance of the trial of the defendant’s counter-claim…. The court’s order, which

carefully preserved the right to trial by jury upon the conspiracy and damage issues raised by the counterclaim …,

was in conformity with the specific provisions of the Federal Rules of Civil Procedure. 3 Yet it is decided today that

the Court of Appeals must compel the district judge to rescind it.

3 3 Rule 42(b) provides: ‘(b) Separate Trials. The court in furtherance of convenience or to avoid prejudice

may order a separate trial of any claim, cross-claim, counterclaim, or third-party claim, or of any separate issue or of

any number of claims, cross-claims, counterclaims, third-party claims, or issues.’ The Note to Rule 39 of the

Page 115 of 201

That finding is accepted in the prevailing opinion today. If the [Fox equity] complaint had been answered simply by a general denial, therefore, the issues would under traditional principles have been triable as a proceeding in equity. Instead of just putting in issue the allegations of the complaint, however, Beacon filed pleadings which affirmatively alleged the existence of a broad conspiracy among the plaintiff and other theatre owners to monopolize the first-run exhibition of films in the San Bernardino area to refrain from competing among themselves, and to discriminate against Beacon in granting film licenses. Based upon these allegations, Beacon asked damages in the amount of $300,000. Clearly these conspiracy allegations stated a cause of action triable as of right by a jury. What was demanded by Beacon, however, was a jury trial not only of this cause of action, but also of the issues presented by the original complaint.

Assuming the existence of a factual issue common both to the plaintiff’s original action and the defendant’s counterclaim for damages, I cannot agree that the District Court must be compelled to try the counterclaim first. It is, of course, a matter of no great moment in what order the issues between the parties in the present litigation are tried. What is disturbing is the process by which the Court arrives at its decision—a process which appears to disregard the historic relationship between equity and law.

I.

. . .

It has been an established rule ‘that equitable jurisdiction existing at the filing of a bill [complaint in equity] is not destroyed because an adequate legal remedy may have become available thereafter.’ It has also been long settled that the District Court in its discretion may order the trial of a suit in equity in advance of an action at law between the same parties, even if there is a factual issue common to both.8

Advisory Committee on Rules states that, ‘When certain of the issues are to be tried by jury and others by the court,

the court may determine the sequence in which such issues shall be tried.’ This language was at one time contained

in a draft of the Rules, but was deleted because ‘the power is adequately given by Rule 42(b)….’ See also Rule 57,

which provides, inter alia, that ‘The court may order a speedy hearing of an action for a declaratory judgment and

may advance it on the calendar.’

8 8 … ‘A court has control over its own docket. … In the exercise of a sound discretion it may hold one lawsuit in abeyance to abide the outcome of another, especially where the parties and the issues are the same … [Supreme Court citation omitted].

Page 116 of 201

. . .

III.

The Court today sweeps away these basic principles as ‘precedents decided under discarded procedures.’ It suggests that the Federal Rules of Civil Procedure have somehow worked an ‘expansion of adequate legal remedies’ so as to oust the District Courts of equitable jurisdiction, as well as to deprive them of their traditional power to control their own dockets. But obviously the Federal Rules could not and did not ‘expand’ the substantive law one whit.1010

Like the Declaratory Judgment Act, the Federal Rules preserve inviolate the right to trial by jury in actions historically cognizable at common law, as under the Constitution they must. They do not create a right of trial by jury where that right ‘does not exist under the Constitution or statutes of the United States.’ Since Beacon’s counterclaim was compulsory under the Rules, it is apparent that by filing it Beacon could not be held to have waived its jury rights. But neither can the counterclaim be held to have transformed Fox’s original complaint into an action at law.

The Rules make possible the trial of legal and equitable claims in the same proceeding, but they expressly affirm the power of a trial judge to determine the order in which claims shall be heard.. Certainly the Federal Rules were not intended to undermine the basic structure of equity jurisprudence, developed over the centuries and explicitly recognized in the United States Constitution.

Notes and Questions:

1. How does one claim the right to jury trial in a lawsuit? Can the Seventh Amendment right to jury trial be waived? Can the trial judge nevertheless authorize a jury trial? 2. What rule did the Beacon court announce? Did its ruling preclude the trial judge from issuing an injunction in this (or a like) case? So who is the fact-finder[s]? ………………………. 3. The dissent accuses the majority of transforming Fox’s equity complaint into a legal one. Do you agree? Can it be argued that—because juries do not render injunctions—that there is still a determination the judge may make, after the jury returns its verdict?

1010 Congressional authorization of the Rules expressly provided that ‘Said rules shall neither abridge, enlarge, nor modify the substantive rights of any litigant.’ See 28 U.S.C. s[ection] 2072.

Page 117 of 201

DAIRY QUEEN, INC. v. WOODUnited States Supreme Court

369 U.S. 469 (1962)

Mr. Justice Black delivered the [unanimous, with a concurring] opinion of the Court.

The United States District Court for the Eastern District of Pennsylvania granted a motion to strike petitioner’s demand for a trial by jury in an action now pending before it on the alternative grounds that either the action was ‘purely equitable’ or, if not purely equitable, whatever legal issues that were raised were ‘incidental’ to equitable issues, and, in either case, no right to trial by jury existed. The petitioner then sought mandamus in the Court of Appeals for the Third Circuit to compel the district judge to vacate this order. When that court denied this request without opinion, we granted certiorari because the action of the Court of Appeals seemed inconsistent with protections already clearly recognized for the important constitutional right to trial by jury in our previous decisions.

At the outset, we may dispose of one of the grounds upon which the trial court acted in striking the demand for trial by jury—that based upon the view that the right to trial by jury may be lost as to legal issues where those issues are characterized as ‘incidental’ to equitable issues—for our previous decisions make it plain that no such rule may be applied in the federal courts.

. . .

A Dairy Queen store in Pennsylvania, circa 1960.

Source: <http://www.triblocal.com/joliet/files/cache/2011/05/251.jpg/460_345_resize.jpg>

Reprinted with Permission of Dairy Queen International

Page 118 of 201

The holding in Beacon Theatres was that where both legal and equitable issues are presented in a single case, ‘only under the most imperative circumstances, circumstances which in view of the flexible procedures of the Federal Rules we cannot now anticipate, can the right to a jury trial of legal issues be lost through prior determination of equitable claims.’ That holding, of course, applies whether the trial judge chooses to characterize the legal issues presented as ‘incidental’ to equitable issues or not.8 Consequently, in a case such as this where there cannot even be a contention of such ‘imperative circumstances,’ Beacon Theatres requires that any legal issues for which a trial by jury is timely and properly demanded be submitted to a jury. There being no question of the timeliness or correctness of the demand involved here, the sole question which we must decide is whether the action now pending before the District Court contains legal issues.

The District Court proceeding arises out of a controversy between petitioner and the respondent owners of the trademark ‘DAIRY QUEEN’ with regard to a written licensing contract made by them in December 1949, under which petitioner [Wood] agreed to pay some $150,000 for the exclusive right to use that trademark in certain portions of Pennsylvania. The terms of the contract provided for a small initial payment with the remaining payments to be made at the rate of 50% of all amounts received by petitioner on sales and franchises to deal with the trademark and, in order to make certain that the $150,000 payment would be completed within a specified period of time, further provided for minimum annual payments regardless of petitioner’s receipts. In August 1960, the respondents wrote petitioner a letter in which they claimed that petitioner had committed ‘a material breach of that contract’ by defaulting on the contract’s payment provisions and notified petitioner of the termination of the contract and the cancellation of petitioner’s right to use the trademark unless this claimed default was remedied immediately. When petitioner continued to deal with the trademark despite the notice of termination, the respondents brought an action based upon their view that a material breach of contract had occurred.

The complaint filed in the District Court alleged, among other things, that petitioner had ‘ceased paying … as required in the contract;’ that the default ‘under the said contract … (was) in excess of $60,000.000;’ that this default constituted a ‘material breach’ of that contract; that petitioner had been notified by letter that its failure to pay as alleged made it guilty of a material breach of contract which if not ‘cured’ would result in an immediate cancellation of the contract; that the breach had not been cured but that petitioner was contesting the cancellation and continuing to conduct business as an authorized dealer; that to continue such business after the cancellation of the contract constituted an infringement of the respondents’ trademark; that petitioner’s financial condition was unstable; and that because of the foregoing allegations, respondents were threatened with irreparable injury for which they had no adequate remedy at law. The complaint then prayed for both temporary and permanent relief, including: (1) 8 8 ‘It is therefore immaterial that the case at bar contains a stronger basis for equitable relief than was present in Beacon Theatres. It would make no difference if the equitable cause clearly outweighed the legal cause so that the basic issue of the case taken as a whole is equitable. As long as any legal cause is involved the jury rights it creates control. This is the teaching of Beacon Theatres, as we construe it.’

Page 119 of 201

temporary and permanent injunctions to restrain petitioner from any future use of or dealing in the franchise and the trademark; (2) an accounting to determine the exact amount of money owing by petitioner and a judgment for that amount; and (3) an injunction pending accounting to prevent petitioner from collecting any money from ‘Dairy Queen’ stores in the territory.

In its answer to this complaint, petitioner raised a number of defenses, including: (1) a denial that there had been any breach of contract, apparently based chiefly upon its allegation that in January 1955 the parties had entered into an oral agreement modifying the original written contract by removing the provision requiring minimum annual payments regardless of petitioner’s receipts thus leaving petitioner’s only obligation that of turning over 50% of all its receipts; (2) laches and estoppel arising from respondents’ failure to assert their claim promptly, thus permitting petitioner to expend large amounts of money in the development of its right to use the trademark; and (3) alleged violations of the antitrust laws by respondents in connection with their dealings with the trademark. Petitioner indorsed upon this answer a demand for trial by jury in accordance with Rule 38(b) of the Federal Rules of Civil Procedure.1111

Petitioner’s contention … is that insofar as the complaint requests a money judgment it presents a claim which is unquestionably legal. …

The respondents’ contention that this money claim is ‘purely equitable’ is based primarily upon the fact that their complaint is cast in terms of an ‘accounting,’ rather than in terms of an action for ‘debt’ or ‘damages.’ But the constitutional right to trial by jury cannot be made to depend upon the choice of words used in the pleadings. The necessary prerequisite to the right to maintain a suit for an equitable accounting, like all other equitable remedies, is, as we pointed out in Beacon Theaters, the absence of an adequate remedy at law. Consequently, in order to maintain such a suit on a cause of action cognizable at law, as this one [in Dairy Queen] is, the plaintiff must be able to show that the ‘accounts between the parties’ are of such a ‘complicated nature’ that only a court of equity can satisfactorily unravel them.a In view of the powers given to District Courts by Federal Rule of Civil Procedure 53(b) to appoint masters to assist the jury in those exceptional cases where the legal issues are too complicated for the jury adequately to handle alone, the burden of such a showing is considerably increased and it will indeed be a rare case in which it can be met. But be that as it may, this is certainly not such a case. A jury, under proper instructions from the court, could readily determine the recovery, if any, to be had here, whether the theory finally settled upon is that of breach of contract, that of trademark infringement, or any combination of the two. The legal remedy cannot be characterized as

11 11 ‘Any party may demand a trial by jury of any issue triable of right by a jury by serving upon the other parties a demand therefor in writing at any time after the commencement of the action and not later than 10 days after the service of the last pleading directed to such issue. Such demand may be indorsed upon a pleading of the party.’a a The Court did not resolve this looming sub-issue on these facts. This is, however, your first notice that there may be a complexity exception to the Seventh Amendment—to be addressed in the next assigned case (Japanese Electronics).

Page 120 of 201

inadequate merely because the measure of damages may necessitate a look into petitioner’s business records.

Nor is the legal claim here rendered ‘purely equitable’ by the nature of the defenses interposed by petitioner. Petitioner’s primary defense to the charge of breach of contract—that is, that the contract was modified by a subsequent oral agreement—presents a purely legal question having nothing whatever to do either with novation, as the district judge suggested, or reformation, as suggested by the respondents here. Such a defense goes to the question of just what, under the law, the contract between the respondents and petitioner is and, in an action to collect a debt for breach of a contract between these parties, petitioner has a right to have the jury determine not only whether the contract has been breached and the extent of the damages if any but also just what the contract is.

We conclude therefore that the district judge erred in refusing to grant petitioner’s demand for a trial by jury on the factual issues related to the question of whether there has been a breach of contract. Since these issues are common with those upon which respondents’ claim to equitable relief is based, the legal claims involved in the action must be determined prior to any final court determination of respondents’ equitable claims.2020 The Court of Appeals should have corrected the error of the district judge by granting the petition for mandamus. The judgment is therefore reversed and the cause remanded for further proceedings consistent with this opinion.

Reversed and remanded [for jury trial of the “at law” money damage issues].

. . .

Mr. Justice Harlan, whom Mr. Justice Douglas joins, concurring.

I am disposed to accept the view, strongly pressed at the bar, that this complaint seeks an accounting for alleged trademark infringement, rather than contract damages. Even though this leaves the complaint as formally asking only for equitable relief, this does not end the inquiry. The fact that an ‘accounting’ is sought is not of itself dispositive of the jury trial issue. … It is manifest from the face of the complaint that the ‘accounting’ sought in this instance is not of either variety [exclusively patent infringement or contract]. A jury, under proper instructions from the court, could readily calculate the damages flowing from this alleged trademark infringement, just as courts of law often do in copyright and patent cases.

Consequently what is involved in this case is nothing more than a joinder in one complaint of prayers for both legal and equitable relief. In such circumstances, … the petitioner

20 20 This does not, of course, interfere with the District Court's power to grant temporary relief pending a final adjudication on the merits. Such temporary relief has already been granted in this case and is no part of the issues before this Court.

Page 121 of 201

cannot be deprived of his constitutional right to a jury trial on the ‘legal’ claim contained in the complaint.

On this basis I concur in the judgment of the Court.

Notes and Questions:

1. The three basic charging allegations of the DQ complaint seek an accounting from defendant Woods. An accounting action—then, and now—is an action inequity. Why, then, is there a Seventh Amendment issue?

2. This complaint sought primarily equitable relief: an accounting, which is historically (and today) a claim arising in equity. But “legal relief”—i.e. money damages—was also sought. The latter was incidental to the main relief plaintiff Dairy Queen sought. Prior to Dairy Queen, a federal judge could decide the entire case, including such incidental monetary relief. Building upon the Beacon Theaters framework, what rule can you articulate as the essential holding in Dairy Queen? (The latter case thus sealed a form of legal loophole left open by Beacon.)

Page 122 of 201

IN RE JAPANESE ELECTRONIC PRODUCTS ANTITRUST LITIGATIONUnited States Court of Appeals, Third Circuit

631 F.2d 1069 (1980)

Seitz, Chief Judge [delivered the court’s 2-1 opinion].

This certified interlocutory appeal from a pretrial order of the district court raises an issue that currently is the subject of much debate: In an action … under the antitrust and antidumping laws, do the parties have a right to trial by jury without regard to the practical ability of a jury to decide the case properly?

I.

This litigation began in the District of New Jersey with the complaint of National Union Electric Corp. (NUE). … NUE was a major domestic producer of television receivers until February 1970. The following December, it filed the first complaint of this litigation, charging several of its Japanese competitors with violations of the antitrust laws and the laws governing competition [“dumping”] in international trade. The complaint names as defendants the Mitsubishi Corp., which is a Japanese trading company, and seven Japanese television manufacturers: Matsushita Electric Industrial Co., Toshiba Corp., Hitachi, Ltd., Sharp Corp., Mitsubishi Electric Corp., Sanyo Electric Co., and Sony Corp. Nine subsidiaries of these companies also are named as defendants in NUE’s action.

NUE alleges that the defendants have sought to drive American television producers out of the American market by selling televisions at artificially depressed prices. Charging that defendants have maintained lower prices for televisions sold in the United States than for comparable televisions sold in Japan, NUE asserts violations of the 1916 Antidumping Act. NUE further alleges that these dumping practices are part of a large conspiracy in which defendants have agreed among themselves and have acted in concert with over 90 coconspirators around the world to maintain artificially low prices for Japanese televisions sold in the United States. …

. . .

Zenith Radio Corp., a major domestic producer of consumer electronic products, filed the second complaint of this litigation.

. . .

A group of the Japanese defendants in the Zenith action filed two counterclaims. The first charges Zenith and its distributors throughout the United States with territorial allocations, horizontal and vertical price-fixing schemes, “key dealer preferences,” and price discrimination, in violation of … the Sherman Act and the Robinson-Patman Act. The second counterclaim

Page 123 of 201

charges Zenith and about 30 coconspirators with maintaining a program of sham litigation against Zenith’s competitors.

Sears filed a separate counterclaim challenging Zenith’s advertising claims that Zenith color televisions are manufactured in the United States. Sears claims that the advertisements create an impression that all components of Zenith’s color televisions and other consumer electronic products are of American origin, when some components are manufactured abroad. …

Shortly after the filing of the Zenith action, the two suits were consolidated for pretrial proceedings in the Eastern District of Pennsylvania. Subsequently, the district court, on NUE’s motion, consolidated the two suits for trial. …

Both NUE and Zenith made timely demands for jury trial. Fourteen of the defendants moved to strike the demands, arguing that the case is too large and complex for a jury. The district court denied their motion, concluding that the seventh amendment does not recognize the complexity of a lawsuit as a valid reason for denying a jury trial. The court explained its reasoning in a thorough and scholarly opinion, and certified its order for interlocutory appeal…. We have permitted the appeal to determine whether the district court’s reason for denying appellants’ motion was correct.

II.

Appellants argue that the proof of the foregoing claims will be too burdensome and complicated for a jury. They have cited several dimensions of complexity.

The district court accepted one of appellants’ basic contentions: the trial will be protracted. The court predicted that the trial would last a full year. It noted that the parties are nearing the end of discovery, which after nine years has produced millions of documents and over 100,000 pages of depositions. The court did not estimate how much of this evidence will be introduced at trial.

. . .

The conspiracy charged in this suit is massive. Appellees allege that it has lasted for at least 30 years, involved almost 100 firms around the world, and affected international trade in several consumer electronic products. Appellants argue that litigation of the existence and operation of this conspiracy will produce an enormous amount of evidence for the jury to consider. They see further difficulties in the fact that the alleged conspiracy involved Japanese businessmen and that its operations included restraint of trade in Japanese markets. Appellants fear that a jury might not understand the evidence due to the difficulty of understanding business practices and market conditions in Japan. Appellees respond that proof of the conspiracy and its operations will be simple because the facts are well established in unambiguous documentation. Appellees foresee no difficulties due to allegations involving Japan. They characterize the

Page 124 of 201

alleged conspiracy as “classic,” much like combinations ordinarily revealed in Sherman Act cases.

. . .

Finally, appellants argue that the complexity of the suit will be compounded by the presence of some issues that conceptually are very difficult. The claims … will require proof of predatory intent. … [A]ppellees will have to prove relevant product markets, relevant geographic markets, and market shares. Zenith’s [counter-claims … will raise issues of whether products sold to different customers are of a “like grade and quality” and whether any price differences are cost justified.

. . .

The district court [said:] “We expect that the actual size of complexity of this litigation falls somewhere in between the two extremes portrayed by the parties.” The court added, “By any yardstick, this case is at least as large and complex as the others in which jury demands have been struck (on grounds of complexity).” It then proceeded to the conclusion that the seventh amendment preserves the right to jury trial in this suit regardless of its complexity [italics added]. That construction of the seventh amendment is the focus of this appeal.

III.

. . .

The Senate’s [1890] debate on the earlier Sherman Act provision contains a few passages in which a senator mentions, in the course of discussing some other issue, that juries will hear treble damage actions. ...

In short, the legislative history indicates nothing more than the expectation of several congressmen that the seventh amendment generally would guarantee a right to jury trial in treble damage actions under the antitrust laws. We are unable to translate their expectations of the ordinary application of the seventh amendment into an intention to require jury trial by statute.

. . .

Appellants offer two grounds for ruling that the seventh amendment does not guarantee a jury trial in this case, one of which does not depend upon characterizing the suit as equitable. That is the argument based on the due process clause.

. . .

For the sake of clarity, we should state our understanding of complexity in this context. A suit is too complex for a jury when circumstances render the jury unable to decide in a proper manner. The law presumes that a jury will find facts and reach a verdict by rational means. It

Page 125 of 201

does not contemplate scientific precision but does contemplate a resolution of each issue on the basis of a fair and reasonable assessment of the evidence and a fair and reasonable application of the relevant legal rules. A suit might be excessively complex as a result of any set of circumstances which singly or in combination render a jury unable to decide in the foregoing rational manner. Examples of such circumstances are an exceptionally long trial period and conceptually difficult factual issues.

Some district courts have recognized complexity as a grounds for denying jury trial. On the other hand, the Ninth Circuit recently has held that the seventh amendment applies without regard to a lawsuit’s size or complexity.

The Supreme Court has supplied direct support for appellants’ position only in a footnote to its opinion in Ross v. Bernhard :

As our cases indicate, the “legal” nature of an issue is determined by considering, first, the pre-merger custom with reference to such questions; second, the remedy sought; and, third, the practical abilities and limitations of juries [italics added].

The [italicized] third prong of the [Ross] test plainly recognizes the significance, for purposes of the seventh amendment, of the possibility that a suit may be too complex for a jury. Its inclusion in the three prong test strongly suggests that jury trial might not be guaranteed in extraordinarily complex cases….

The district court [in this case] made no use of the Ross footnote, finding it too brief to authorize a major departure from the traditional construction of the seventh amendment. We also find it unlikely that the Supreme Court would have announced an important new application of the seventh amendment in so cursory a fashion. Yet, at the very least, the Court has left open the possibility that the “practical abilities and limitation of juries” may limit the range of suits subject to the seventh amendment and has read its prior seventh amendment decisions as not precluding such a ruling. With this understanding of Ross, we shall consider the merits of appellants’ arguments for a complexity exception.

V.

Appellants’ first argument relies on historical analysis to advance the proposition that the fact of extraordinary complexity renders a suit equitable in nature. Although complexity is not commonly recognized as a defining feature of equity, appellants argue that by the time of the adoption of the seventh amendment the chancellor’s jurisdiction had extended to any suit that he found too complex for a jury. They have submitted a large body of historical authorities to support this proposition. The brief of International Business Machines Corporation, amicus

Page 126 of 201

curiae in this case, provides some additional historical authorities to support several of appellants’ arguments.

A.

Most of these authorities are suits seeking relief in the form of an [equitable] accounting between the parties.

. . . ..........................................................................Suits … under the antitrust and antidumping laws are similar in form to suits for damages

in tort. They impose liability for money damages.... Hence, the present lawsuit is most similar to actions in which an equitable accounting was unavailable. Appellants’ analogy, therefore, fails.

B.

Appellants also cite a variety of cases that do not involve accountings. They claim that in each of these cases the chancellor took [equitable] jurisdiction because extraordinary complexity made the suit too complex for a common-law jury.

. . .

Whether or not … these conclusions … [are] correct is a question that may interest historians; we need not decide it here. ... With this meager support, we cannot conclude that complexity alone ever was an established basis of equitable jurisdiction.

. . .

VI.

Both appellants and IBM offer a second constitutional argument. They contend that the due process clause of the fifth amendment prohibits trial by jury of a suit that is too complex for a jury. They further contend that this due process limitation prevails over the seventh amendment’s preservation of the right to jury trial.

Although no specific precedent exists for a finding a due process violation in the trial of any case to a jury, the principles that define the procedural requirements of due process would seem to impose some limitations on the range of cases that may be submitted to a jury. The primary value promoted by due process in fact-finding procedures is “to minimize the risk of erroneous decisions.” A jury that cannot understand the evidence and the legal rules to be applied provides no reliable safeguard against erroneous decisions. Moreover, in the context of a completely adversary proceeding, like a civil trial, due process requires that “the decision-maker’s conclusion ... rest solely on the legal rules and evidence adduced at the hearing.” Unless the jury can understand the legal rules and evidence, we cannot realistically expect that the jury will rest its decision on them.

Page 127 of 201

As we have noted, the law presumes that a jury will decide rationally; it will resolve each disputed issue on the basis of a fair and reasonable assessment of the evidence and a fair and reasonable application of relevant legal rules. We conclude that due process precludes trial by jury when a jury is unable to perform this task with a reasonable understanding of the evidence and the legal rules.

If a particular lawsuit is so complex that a jury cannot satisfy this requirement of due process but is nonetheless an action at law, we face a conflict between the requirements of the fifth and seventh amendments. In this situation, we must balance the constitutionally protected interest, as they are implicated in this particular context, and reach the most reasonable accommodation between the two constitutional provisions.

The due process objections to jury trial of a complex case implicate values of fundamental importance. If judicial decisions are not based on factual determinations bearing some reliable degree of accuracy, legal remedies will not be applied consistently with the purposes of the laws. There is a danger that jury verdicts will be erratic and completely unpredictable, which would be inconsistent with evenhanded justice. Finally, unless the jury can understand the evidence and the legal rules sufficiently to rest its decision on them, the objective of most rules of evidence and procedure in promoting a fair trial will be lost entirely. We believe that when a jury is unable to perform its decision-making task with a reasonable understanding of the evidence and legal rules, it undermines the ability of a district court to render basic justice.

The loss of the right to jury trial in a suit found too complex for a jury does not implicate the same fundamental concerns. The absence of a jury trial requirement in equitable and maritime actions indicates that federal courts can provide fair trials and can grant relief in accordance with the principles of basic justice without the aid of a jury. Moreover, the Supreme Court has consistently refused to rule that preservation of civil jury trial is an essential element of ordered liberty required of the states by the due process clause of the fourteenth amendment.

. . .

The district court asserted that the due process argument fails to account for the special benefits that juries bring to civil litigation. Because the jury is a representative of the community and can call upon the community’s wisdom and values, the legal system has relied on it to perform two important functions. The first is “black box” decision-making. The jury issues a verdict without an opinion to explain or justify its decision. This feature allows juries to perform a type of “jury equity,” modifying harsh results of law to conform to community values in cases where a judge would have to apply the law rigidly. The second function is to accord a greater measure of legitimacy to decisions that depend upon determinations of degree rather than of absolutes, such as whether particular conduct constitutes negligence. Certain decisions of this “line-drawing” nature seem less arbitrary when made by a representative body like the jury.

Page 128 of 201

In the context of a lawsuit of the complexity that we have posited, however, these features do not produce real benefits of substantial value. The function of “jury equity” may be legitimate when the jury actually modifies the law to conform to community values. However, when the jury is unable to determine the normal application of the law to the facts of a case and reaches a verdict on the basis of nothing more than its own determination of community wisdom and values, its operation is indistinguishable from arbitrary and unprincipled decision-making. Similarly, the “line-drawing” function is difficult to justify when the jury cannot understand the evidence or legal rules relevant to the issue of where to draw a line.

The district court also noted that preservation of the right to jury trial is important because the jury “provides a needed check on judicial power.” A jury unable to understand the evidence and legal rules is hardly a reliable and effective check on judicial power. Our liberties are more secure when judicial decision-makers proceed rationally, consistently with the law, and on the basis of evidence produced at trial. If the jury is unable to function in this manner, it has the capacity of becoming itself a tool of arbitrary and erratic judicial power.

Therefore, we find the most reasonable accommodation between the requirements of the fifth and seventh amendments to be a denial of jury trial when a jury will not be able to perform its task of rational decision-making with a reasonable understanding of the evidence and the relevant legal standards. In lawsuits of this complexity, the interests protected by this procedural rule of due process carry greater weight than the interests served by the constitutional guarantee of jury trial. Consequently, we shall not read the seventh amendment to guarantee the right to jury trial in these suits.

VII.

The district court devoted most of its discussions of appellants’ due process argument not to factors relevant to the balancing of interests set out in the foregoing section but to a number of practical objections to the argument [italics added]. We shall consider those objections in this section.

First, the district court challenged the premise that a case could exceed a jury’s ability to decide rationally and asserted that a jury was at least as able as a judge, the only alternative fact-finder, to decide complex cases. The court noted that a jury possesses the wisdom, experience, and common sense of twelve persons.

. . .

[But a]ny assessment of a jury’s ability to decide complex cases should include consideration not only of a jury’s particular strengths and the possible enhancement of its capabilities but also of the particular constraints that operate on a jury in complex cases. The long time periods required for most complex cases are especially disabling for a jury. A long trial

Page 129 of 201

can interrupt the career and personal life of a jury member and thereby strain his commitment to the jury’s task.

. . .

A … long trial would not greatly disrupt the professional and personal life of a judge and should not be significantly disabling. In fact, the judge's greater ability to allocate time to the task of deciding a complex case can be a major advantage in surmounting the difficulties posed by the suit. Although we cannot presume that a judge will be more intelligent than a jury or more familiar with technical subject matters, a judge will almost surely have substantial familiarity with the process of civil litigation, as a result of experience on the bench or in practice.

. . .

The district court’s second objection to appellants’ due process argument was that the court can prevent an “irrational” verdict with its power to direct a verdict or to grant judgment n. o. v. [notwithstanding the verdict].

. . .

Denial of a jury trial may [instead] be necessary to minimize the risk of erroneous decisions. … Given that substantial property rights often are at stake in actions at law, we believe that due process requires a greater measure of reliability in the decision-making process. It requires some fair assurance that the jury’s findings of fact and applications of legal rules are reasonably correct. When a jury is unable to understand the evidence and the legal rules, it cannot provide this measure of assurance.

. . .

Finally, the district court feared that the authority to strike jury trial demands on case-by-case determinations of complexity would lead to the long-run dilution of the right to jury trial.

. . .

We do not believe that a due process limitation [necessarily] allows the district courts a substantial amount of discretion to deny jury trials. Because preservation of the right to jury trial remains a constitutionally protected interest, denials of jury trial on grounds of complexity should be confined to suits in which due process clearly requires a nonjury trial.

. . .

We further recognize a relative lack of precision in this standard, but we do not believe that this problem threatens a dilution in the right to jury trial. We believe that district judges will apply the standard with a good faith concern for the general preservation of the right to jury trial. … As an added safeguard, we will require that the district court make explicit findings on the

Page 130 of 201

dimensions of complexity when it denies a jury trial in an action at law on grounds of complexity.

In summary, the district court’s practical objections to a due process limitation do not compel its rejection. However, the concern for preservation of the right to jury trial should guide its application. In suits at law, a court should deny jury trial on due process grounds only in exceptional cases when the court, after careful inquiry into the factors contributing to complexity, determines that a jury would be unable to understand the case and decide it rationally. Before any such denial, due consideration should be given to the particular strengths of the jury in deciding complex cases, to the possible use of special trial techniques to increase a jury's capabilities, and to methods of reducing the suit's complexity.

VIII.

We turn to the disposition of this appeal. The district court concluded that “the complexity of the case before us is not a constitutionally permissible reason for striking the plaintiffs’ jury demands.” We are constrained to disagree.

. . .

Thus, the district court has not ruled on whether this particular lawsuit is too complex for a jury to understand and decide rationally. The court relied entirely on its construction of the seventh amendment and the due process clause. We shall vacate the court’s order [denying the motion to strike the jury demand] on the basis of our previous discussion and shall leave for consideration on remand the issue of the complexity of this lawsuit.

. . .

The order of the district court will be vacated and the case remanded for proceedings consistent with this opinion.

Gibbons, Circuit Judge, dissenting.

… I conclude that the majority has substituted for an express guarantee in the Bill of Rights a rule of district court discretion that in practice will be virtually unreviewable, and therefore largely unfettered. Between Judge Becker’s opinion in the district court and that of Chief Judge Seitz here, enough has been written that an extended separate statement is hardly appropriate.

. . .

The court has now authorized pretrial denials of demands for jury trial in suits at common law “on due process grounds ... in exceptional cases when the court, after careful inquiry into the

Page 131 of 201

factors contributing to complexity, determines that a jury would be unable to understand the case and decide it rationally.” The majority opinion attempts to objectify the factors that bear upon complexity, but in the end the factors which are identified will permit the exercise of trial court discretion. … Trial court discretion, moreover, in any practical sense will be completely unreviewable. …

Part of my difficulty with the majority’s position probably results from a perception of the nature of the judicial process and the role of juries in that process. It is often said that the judicial process involves the search for objective truth. We have no real assurance, however, of objective truth whether the trial is to the court or to a jury. The ... seventh amendment is not a useless appendage to the Bill of Rights, but an important resource in maintaining the authority of the rule of law. ... The jury is a sort of ad hoc parliament convened from the citizenry at large to lend respectability and authority to the process. Judges are often prone to believe that they, alone, can bear the full weight of this legitimizing function. I doubt that they can. Any erosion of citizen participation in the sanctioning system is in the long run likely, in my view, to result in a reduction in the moral authority that supports the process.

. . .

Notes and Questions:

1. Some of the defendants wanted a jury trial. Others did not. What might be some of the practical arguments—for and against trial by jury?

2. As the appellate majority states: “Because preservation of the right to jury trial remains a constitutionally protected interest, denials of jury trial on grounds of complexity should be confined to suits in which due process clearly requires a nonjury trial.” Did the majority define which suits would qualify?

3. The appellate court stated that the trial court did not actually rule on the applicability of the complexity exception to this case. Did the appellate court do so?

4. The Courts of Appeals are divided on whether Fifth Amendment Due Process trumps the Seventh Amendment right to jury trial. One wonders whether the Supreme Court will ever grant certiorari to resolve the complexity exception’s constitutional viability.

5. You are now on the Supreme Court. You’ve read (heard) the arguments. How will you vote?

Page 132 of 201

ATLAS ROOFING COMPANYv.

OCCUPATIONAL SAFETY AND HEALTH REVIEW COMMISSIONUnited States Supreme Court

430 U.S. 442 (1977)

Mr. Justice White delivered the [unanimous] opinion of the Court.a

The issue in these cases is whether, consistent with the Seventh Amendment, Congress may create a new cause of action … for civil penalties enforceable in an administrative agency where there is no jury trial.

I

After extensive investigation, Congress concluded, in 1970, that work-related deaths and injuries had become a ‘drastic’ national problem. Finding the existing state statutory remedies as well as state common-law actions for negligence and wrongful death to be inadequate to protect the employee population from death and injury due to unsafe working conditions, Congress enacted the Occupational Safety and Health Act of 1970 (OSHA or Act). The Act created a new statutory duty to avoid maintaining unsafe or unhealthy working conditions, and empowers the Secretary of Labor to promulgate health and safety standards. Two new remedies were provided permitting the Federal Government, proceeding before an administrative agency, (1) to obtain abatement orders requiring employers to correct unsafe working conditions and (2) to impose civil penalties on any employer maintaining any unsafe working condition. Each remedy exists whether or not an employee is actually injured or killed as a result of the condition, and existing state statutory and common-law remedies for actual injury and death remain unaffected.

Under the Act, inspectors, representing the Secretary of Labor, are authorized to conduct reasonable safety and health inspections. If a violation is discovered, the inspector, on behalf of the Secretary, issues a citation to the employer fixing a reasonable time for its abatement and, in his discretion, proposing a civil penalty. Such proposed penalties may range from nothing for de minimis and non-serious violations, to not more than $1,000 for serious violations, to a maximum of $10,000 for willful or repeated violations.

If the employer wishes to contest the penalty or the abatement order, he may do so by notifying the Secretary of Labor within 15 days, in which event the abatement order is automatically stayed. An evidentiary hearing is then held before an administrative law judgeb of the Occupational Safety and Health Review Commission. The Commission consists of three a a The term “fact-finding” was substituted for “factfinding” throughout this opinion. b b Administrative law judge (ALJ) proceedings are generally described at 5 USC § 556 . Unlike Article III judges—who are appointed (for life) by the President, and confirmed by the Senate—ALJs serve at the pleasure of the administrative agency that employs them. Each is ostensibly quite familiar with the statutes and regulations of the government agency within which they serve. Article III judges typically do not have this special regulatory-related expertise in a regulated field.

Page 133 of 201

members, appointed for six-year terms, each of whom is qualified ‘by reason of training, education or experience’ to adjudicate contested citations and assess penalties. At this hearing the burden is on the Secretary to establish the elements of the alleged violation and the propriety of his proposed abatement order and proposed penalty; and the judge is empowered to affirm, modify, or vacate any or all of these items, giving due consideration in his penalty assessment to ‘the size of the business of the employer ..., the gravity of the violation, the good faith of the employer, and the history of previous violations.’ The judge’s decision becomes the Commission’s final and appealable order unless within 30 days a Commissioner directs that it be reviewed by the full Commission.3

If review is granted, the Commission’s subsequent order directing abatement and the payment of any assessed penalty becomes final unless the employer timely petitions for judicial review in the appropriate court of appeals. The Secretary similarly may seek review of Commission orders, but, in either case, ‘(t)he findings of the Commission with respect to questions of fact, if supported by substantial evidence on the record considered as a whole, shall be conclusive.’ If the employer fails to pay the assessed penalty, the Secretary may commence a collection action in a federal district court in which neither the fact of the violation nor the propriety of the penalty assessed may be retried. Thus, the penalty may be collected without the employer’s ever being entitled to a jury determination of the facts constituting the violation.

II

Petitioners were separately cited by the Secretary and ordered immediately to abate pertinent hazards after inspections of their respective worksites conducted in 1972 revealed conditions that assertedly violated a mandatory occupational safety standard promulgated by the Secretary…. In each case an employee’s death had resulted. Petitioner Irey was cited for a willful violation of … a safety standard … requiring the sides of trenches in ‘unstable or soft material’ to be ‘shored, ... sloped, or otherwise supported by means of sufficient strength to protect the employees working within them.’ The Secretary proposed a penalty of $7,500 for this violation and ordered the hazard abated immediately.

Petitioner Atlas was cited for a serious violation … which require[s] that roof opening covers be ‘so installed as to prevent accidental displacement.’ The Secretary proposed a penalty of $600 for this violation and ordered the hazard abated immediately.

Petitioners timely contested these citations and were afforded hearings before Administrative Law Judges of the Commission. The judges, and later the Commission, affirmed the findings of violations and accompanying abatement requirements and assessed petitioner Irey a reduced civil penalty of $5,000 and petitioner Atlas the civil penalty of $600 which the Secretary had proposed. Petitioners respectively thereupon sought judicial review in the Courts

3 3 Petitioners make no challenge to the absence of mandatory review by the Commission of the administrative law judge’s findings of fact.

Page 134 of 201

of Appeals for the Third and Fifth Circuits, challenging both the Commission’s factual findings that violations had occurred and the constitutionality of the Act’s enforcement procedures.

A panel of the Court of Appeals for the Third Circuit affirmed the Commission’s orders in the Irey case over petitioner’s and a dissenter’s contention that the failure to afford the employer a jury trial on the question whether he had violated OSHA was in violation of the Seventh Amendment to the United States Constitution which provides for jury trial in most civil suits at common law. On rehearing en banc,b the Court of Appeals for the Third Circuit, over four dissents, adhered to the original panel’s decision. It concluded that this [Supreme] Court’s rulings to date ‘leave no doubt that the Seventh Amendment is not applicable, at least in the context of a case such as this one, and that Congress is free to provide an administrative enforcement scheme without the intervention of a jury at any stage.’

The Court of Appeals for the Fifth Circuit also affirmed the Commission’s order in the Atlas case over a similar claim that the enforcement scheme violated the Seventh Amendment. It stated:

Where adjudicative responsibility rests only in the administering agency, ‘jury trials would be incompatible with the whole concept of administrative adjudication and would substantially interfere with the (agency’s) role in the statutory scheme.4

We granted the petitions for writs of certiorari limited to the important question whether the Seventh Amendment prevents Congress from assigning to an administrative agency, under these circumstances the task of adjudicating violations of OSHA.

III

The Seventh Amendment provides that ‘(i)n Suits at common law, … the right of trial by jury shall be preserved....’ The phrase ‘Suits at common law’ has been construed to refer to cases tried prior to the adoption of the Seventh Amendment in courts of law in which jury trial was customary as distinguished from courts of equity or admiralty in which jury trial was not. Petitioners claim that a suit in a federal court by the Government for civil penalties for violation of a statute is a suit for a money judgment which is classically a suit at common law; and that the defendant therefore has a Seventh Amendment right to a jury determination of all issues of fact in such a case. Petitioners then claim that to permit Congress to assign the function of

b b En banc decisions are made by a larger group of justices than the usual three-judge appellate panel. This procedure is reserved for the most critical cases, usually determined on a case-by-case basis by the particular circuit. 4 4 The other Courts of Appeals which have passed on this issue have uniformly (and without a dissent) agreed with these results [citing the 2d, 6th, 8th, and 10th Circuits].

Page 135 of 201

adjudicating the Government’s rights to civil penalties for violation of the statute to a different forum an administrative agency in which no jury is available would be to permit Congress to deprive a defendant of his Seventh Amendment jury right. We disagree. …

Congress has often created new statutory obligations, provided for civil penalties for their violation, and committed exclusively to an administrative agency the function of deciding whether a violation has in fact occurred. These statutory schemes have been sustained by this Court, albeit often without express reference to the Seventh Amendment. Thus taxes may constitutionally be assessed and collected together with penalties, with the relevant facts in some instances being adjudicated only by an administrative agency. Neither of these cases expressly discussed the question whether the taxation scheme violated the Seventh Amendment. … Similarly, Congress has entrusted to an administrative agency the task or adjudicating violations of the customs and immigration laws and assessing penalties based thereon.

. . . In [citation omitted], … the Court stated:

(T)he distinction is at once apparent between cases of private right and those which arise between the Government and persons subject to its authority in connection with the performance of the constitutional functions of the executive or legislative departments. ... (T)he Congress, in exercising the powers confided to it may establish ‘legislative’ courts ... to serve as special tribunals ‘to examine and determine various matters, arising between the government and others, which from their nature do not require judicial determination and yet are susceptible of it.’ But ‘the mode of determining matters of this class is completely within congressional control. Congress may reserve to itself the power to decide, may delegate that power to executive officers, or may commit it to judicial tribunals.’ ... Familiar illustrations of administrative of such matters are found in connection with the exercise of the congressional power as to interstate and foreign commerce, taxation, immigration, the public lands, public health, the facilities of the post office, pensions, and payments to veterans.

In [citation omitted], the Court squarely addressed the Seventh Amendment issue involved when Congress commits the fact-finding function under a new statute to an administrative tribunal. Under the National Labor Relations Act, Congress had committed to the National Labor Relations Board, in a proceeding brought by its litigating arm, the task of deciding whether an unfair labor practice had been committed and of ordering backpay where appropriate. The Court stated:

The instant case is not a suit at common law or in the nature of such a suit. The proceeding is one unknown to the common law. It is a statutory proceeding. Reinstatement of the employee and payment for time lost are requirements

Page 136 of 201

(administratively) imposed for violation of the statute and are remedies appropriate to its enforcement. The contention under the Seventh Amendment is without merit.

This passage … has recently been explained in Curtis v. Loether, in which the Court held the Seventh Amendment applicable to private damages suits in federal courts brought under the housing discrimination provisions of the Civil Rights Act of 1968. The Court rejected the argument that … the Seventh Amendment [is] inapplicable to any action based on a statutorily created right even if the action was brought before a tribunal which customarily utilizes a jury as its fact-finding arm. Instead, we … upheld

congressional power to entrust enforcement of statutory rights to an administrative process or specialized court of equity1111 free from the strictures of the Seventh Amendment.

. . .

In sum, the cases discussed above stand clearly for the proposition that when Congress creates new statutory ‘public rights,’ it may assign their adjudication to an administrative agency with which a jury trial would be incompatible, without violating the Seventh Amendment’s injunction that jury trial is to be ‘preserved’ in ‘suits at common law.’ Congress is not required by the Seventh Amendment to choke the already crowded federal courts with new types of litigation or prevented from committing some new types of litigation to administrative agencies with special competence in the relevant field. This is the case even if the Seventh Amendment would have required a jury where the adjudication of those rights is assigned instead to a federal court of law instead of an administrative agency.

. . .

[Next] … is the assertion that the right to jury trial was never intended to depend on the identity of the forum to which Congress has chosen to submit a dispute; otherwise, it is said, Congress could utterly destroy the right to a jury trial by always providing for administrative rather than judicial resolution of the vast range of cases that now arise in the courts. The argument is well put, but it overstates the holdings of our prior cases and is in any event unpersuasive. Our prior cases support administrative fact-finding in only those situations

11 11 … [T]his Court sustained the power of a bankruptcy court, exercising summary jurisdiction without a jury, to adjudicate the otherwise legal issues of voidable preferences ... on the ground that a bankruptcy court, exercising its summary jurisdiction, was a specialized court of equity and constituted a forum before which a jury would be out of place and would go far to dismantle the statutory scheme.

Page 137 of 201

involving ‘public rights,’ e. g., where the Government is involved in its sovereign capacity under an otherwise valid statute creating enforceable public rights. Wholly private tort, contract, and property cases, as well as a vast range of other cases as well are not at all implicated.

More to the point, it is apparent from the history of jury trial in civil matters that fact-finding, which is the essential function of the jury in civil cases, was never the exclusive province of the jury under either the English or American legal systems at the time of the adoption of the Seventh Amendment; and the question whether a fact would be found by a jury turned to a considerable degree on the nature of the forum in which a litigant found himself. Critical fact-finding was performed without juries in suits in equity, and there were no juries in admiralty; nor were there juries in the military justice system. The jury was the fact-finding mode in most suits in the common-law courts, but it was not exclusively so: Condemnation was a suit at common law but constitutionally could be tried without a jury. ‘(M)any civil as well as criminal proceedings at common law were without a jury.’ The question whether a particular case was to be tried in a court of equity without a jury or a court of law with a jury did not depend on whether the suit involved fact-finding or on the nature of the facts to be found. Fact-finding could be a critical matter either at law or in equity. Rather, as a general rule, the decision turned on whether courts of law supplied a cause of action and an adequate remedy to the litigant. If it did, then the case would be tried in a court of law before a jury. Otherwise the case would be tried to a court of equity sitting without a jury. Thus, suits for damages for breach of contract, for example, were suits at common law with the issues of the making of the contract and its breach to be decided by a jury; but specific performance was a remedy unavailable in a court of law and where such relief was sought the case would be tried in a court of equity with the facts as to making and breach to be ascertained by the court.

The Seventh Amendment was declaratory of the existing law, for it required only that jury trial in suits at common law was to be ‘preserved.’ It thus did not purport to require a jury trial where none was required before. Moreover, it did not seek to change the fact-finding mode in equity or admiralty or to freeze equity jurisdiction as it existed in 1789, preventing it from developing new remedies where those available in courts of law were inadequate. …

The point is that the Seventh Amendment was never intended to establish the jury as the exclusive mechanism for fact-finding in civil cases. It took the existing legal order as it found it, and there is little or no basis for concluding that the Amendment should now be interpreted to provide an impenetrable barrier to administrative fact-finding under otherwise valid federal regulatory statutes. We cannot conclude that the Amendment rendered Congress powerless when it concluded that remedies available in courts of law were inadequate to cope with a problem within Congress’ power to regulate to create new public rights and remedies by statute and commit their enforcement, if it chose, to a tribunal other than a court of law such as an administrative agency in which facts are not found by juries. Indeed, as the Oceanic opinion said, the ‘settled judicial construction’ was to the contrary ‘from the beginning.’

Page 138 of 201

Thus, history and our cases support the proposition that the right to a jury trial turns not solely on the nature of the issue to be resolved but also on the forum in which it is to be resolved.1616 Congress found the common-law and other existing remedies for work injuries resulting from unsafe working conditions to be inadequate to protect the Nation’s working men and women. It created a new cause of action, and remedies therefor, unknown to the common law, and placed their enforcement in a tribunal supplying speedy and expert resolutions of the issues involved. The Seventh Amendment is no bar to the creation of new rights or to their enforcement outside the regular courts of law.

The judgments below are affirmed.

It is so ordered.

Notes and Questions:……………………………………….. 1. As the Court states:

Congress is not required by the Seventh Amendment to choke the already crowded federal courts with new types of litigation or prevented from committing some new types of litigation to administrative agencies with special competence in the relevant field.………. . . . ………………………………………………… The Seventh Amendment is no bar to the creation of new rights or to their enforcement outside the regular courts of law.

Is Congress effectively chipping away at the Seventh Amendment, with each new regulatory regime involving administrative adjudication? …………………………………………………..

2. Did the drafters likely have the public-private rights distinction in mind at the time of the Seventh Amendment’s addition to the Constitution? Did the Court invoke the public-private rights distinction to limit mission-creep—from cases involving government agency adjudication, into the realm of private lawsuits not involving government agencies? If so, what rule can you articulate from Atlas?

16 16 Petitioners claim that permitting Congress to control the jury-right question by picking the forum is to delegate to it, rather than this Court, the final power to decide Seventh Amendment issues. The claim is incorrect. The Seventh Amendment prevents Congress from depriving a litigant of a jury trial in a ‘legal’ action before a tribunal customarily utilizing a jury as its fact-finding arm, and this Court has the final decision on the question whether a jury is required.

Page 139 of 201

BATSON v. KENTUCKYUnited States Supreme Court

476 U.S. 79 (1986) (partially overruled on other grounds)

Justice Powell delivered the [7-2, with three concurring] opinion[s] of the Court.

This case requires us to reexamine …the evidentiary burden placed on a criminal defendant who claims that he has been denied equal protection through the State’s use of peremptory challenges to exclude members of his race from the petit jury.

I

Petitioner, a black man, was indicted in Kentucky on charges of second-degree burglary and receipt of stolen goods. On the first day of trial…, the judge conducted voir dire examination of the venire, excused certain jurors for cause, and permitted the parties to exercise peremptory challenges.2 The prosecutor used his peremptory challenges to strike all four black persons on the venire, and a jury composed only of white persons was selected. Defense counsel moved to discharge the jury before it was sworn on the ground that the prosecutor’s removal of the black veniremen violated petitioner’s rights under the Sixth and Fourteenth Amendments to a jury drawn from a cross section of the community, and under the Fourteenth Amendment to equal protection of the laws. … Without expressly ruling on the request for a hearing, the trial judge observed that the parties were entitled to use their peremptory challenges to “strike anybody they want to.” The judge then denied petitioner’s motion, reasoning that the cross-section requirement applies only to selection of the venire [overall jury pool] and not to selection of the petit jury itself.

The jury convicted petitioner on both counts. On appeal to the Supreme Court of Kentucky, petitioner pressed, among other claims, the argument concerning the prosecutor’s use of peremptory challenges. …

The Supreme Court of Kentucky affirmed … [i]n a single paragraph…. We … now reverse.

II

. . .

2 The Kentucky Rules of Criminal Procedure authorize the trial court to permit counsel to conduct voir dire examination or to conduct the examination itself. After jurors have been excused for cause, the parties exercise their peremptory challenges simultaneously by striking names from a list of qualified jurors equal to the number to be seated plus the number of allowable peremptory challenges. Since the offense charged in this case was a felony … the prosecutor was entitled to six peremptory challenges, and defense counsel to nine.

Page 140 of 201

The basic principles prohibiting exclusion of persons from participation in jury service on account of their race “are essentially the same for grand juries and for petit juries.” …

More than a century ago, the [US Supreme] Court … laid the foundation for the Court’s unceasing efforts to eradicate racial discrimination in the procedures used to select the venire from which individual jurors are drawn. … [T]he central concern of the recently ratified Fourteenth Amendment was to put an end to governmental discrimination on account of race.... Exclusion of black citizens from service as jurors constitutes a primary example of the evil the Fourteenth Amendment was designed to cure.

In holding that racial discrimination in jury selection offends the Equal Protection Clause, the Court … recognized, however, that a defendant has no right to a “petit [as opposed to grand] jury composed in whole or in part of persons of his own race.” … The Equal Protection Clause guarantees the defendant that the State will not exclude members of his race from the [larger pool, i.e.,] jury venire on account of race.

. . .

B

In Strauder, the Court [thus] invalidated a state statute that provided that only white men could serve as jurors. … While decisions of this Court have been concerned largely with discrimination during selection of the venire, the principles announced there also forbid discrimination on account of race in selection of the petit jury. …

Accordingly, the component of the jury selection process at issue here, the State’s privilege to strike individual jurors through peremptory challenges, is subject to the commands of the Equal Protection Clause.1212 Although a prosecutor ordinarily is entitled to exercise permitted peremptory challenges “for any reason at all, as long as that reason is related to his view concerning the outcome” of the case to be tried, … the Equal Protection Clause forbids the prosecutor to challenge potential jurors solely on account of their race or on the assumption that black jurors as a group will be unable impartially to consider the State's case against a black defendant.

III

12 12 We express no views on whether the Constitution imposes any limit on the exercise of peremptory

challenges by defense counsel.

Page 141 of 201

. . .

A

. . .

While the Constitution does not confer a right to peremptory challenges, those challenges traditionally have been viewed as one means of assuring the selection of a qualified and unbiased jury. To preserve the peremptory nature of the prosecutor’s challenge, the Court in Swain declined to scrutinize his actions in a particular case[,] by relying on a presumption that he properly exercised the State’s challenges.

. . .

A number of lower courts following the teaching of Swain reasoned that proof of repeated striking of blacks over a number of cases was necessary to establish a violation of the Equal Protection Clause. Since this interpretation of Swain has placed on defendants a crippling burden of proof, prosecutors’ peremptory challenges are now largely immune from constitutional scrutiny. For reasons that follow, we reject this evidentiary formulation as inconsistent with standards that have been developed since Swain for assessing a prima facie case under the Equal Protection Clause.

. . .

C

The standards for assessing a prima facie case in the context of discriminatory selection of the venire have been fully articulated since Swain [italics added]. These principles support our conclusion that a defendant may establish a prima facie case of purposeful discrimination in selection of the petit jury solely on evidence concerning the prosecutor’s exercise of peremptory challenges at the defendant's trial [italics added]. To establish such a case, the defendant first must show that he is a member of a cognizable racial group…. Second, the defendant is entitled to rely on the fact, as to which there can be no dispute, that peremptory challenges constitute a jury selection practice that permits “those to discriminate who are of a mind to discriminate.” Finally, the defendant must show that these facts and any other relevant circumstances raise an inference that the prosecutor used that practice to exclude the veniremen from the petit jury on account of their race. This combination of factors in the empaneling of the petit jury, as in the selection of the [larger jury pool] venire, raises the necessary inference of purposeful discrimination.

In deciding whether the defendant has made the requisite showing, the trial court should consider all relevant circumstances. For example, a “pattern” of strikes against black jurors included in the particular venire might give rise to an inference of discrimination. Similarly, the prosecutor’s questions and statements during voir dire examination and in exercising his

Page 142 of 201

challenges may support or refute an inference of discriminatory purpose. These examples are merely illustrative. We have confidence that trial judges, experienced in supervising voir dire, will be able to decide if the circumstances concerning the prosecutor’s use of peremptory challenges creates a prima facie case of discrimination against black jurors.

Once the defendant makes a prima facie showing, the burden shifts to the State to come forward with a neutral explanation for challenging black jurors. Though this requirement imposes a limitation in some cases on the full peremptory character of the historic challenge, we emphasize that the prosecutor’s explanation need not rise to the level justifying exercise of a challenge for cause. But the prosecutor may not rebut the defendant’s prima facie case of discrimination by stating merely that he challenged jurors of the defendant’s race on the assumption—or his intuitive judgment—that they would be partial to the defendant because of their shared race. Just as the Equal Protection Clause forbids the States to exclude black persons from the venire on the assumption that blacks as a group are unqualified to serve as jurors, so it forbids the States to strike black veniremen on the assumption that they will be biased in a particular case simply because the defendant is black. The core guarantee of equal protection, ensuring citizens that their State will not discriminate on account of race, would be meaningless were we to approve the exclusion of jurors on the basis of such assumptions, which arise solely from the jurors’ race. Nor may the prosecutor rebut the defendant’s case merely by denying that he had a discriminatory motive or “affirm[ing] [his] good faith in making individual selections.” If these general assertions were accepted as rebutting a defendant’s prima facie case, the Equal Protection Clause “would be but a vain and illusory requirement.” The prosecutor therefore must articulate a neutral explanation related to the particular case to be tried.2020 The trial court then will have the duty to determine if the defendant has established purposeful discrimination.2121

IV

. . .

While we recognize, of course, that the peremptory challenge occupies an important position in our trial procedures, we do not agree that our decision today will undermine the contribution the challenge generally makes to the administration of justice. The reality of practice, amply reflected in many state- and federal-court opinions, shows that the challenge may be, and unfortunately at times has been, used to discriminate against black jurors. By requiring trial courts to be sensitive to the racially discriminatory use of peremptory challenges, our

20 20 The Court of Appeals for the Second Circuit observed … that “[t]here are any number of bases” on which a prosecutor reasonably may believe that it is desirable to strike a juror who is not excusable for cause. As we explained in another context, however, the prosecutor must give a “clear and reasonably specific” explanation of his “legitimate reasons” for exercising the challenges.21 21 In a recent Title VII sex discrimination case, we stated that “a finding of intentional discrimination is a finding of fact” entitled to appropriate deference by a reviewing court. Since the trial judge’s findings in the context under consideration here largely will turn on evaluation of credibility, a reviewing court ordinarily should give those findings great deference.

Page 143 of 201

decision enforces the mandate of equal protection and furthers the ends of justice.2222 In view of the heterogeneous population of our Nation, public respect for our criminal justice system and the rule of law will be strengthened if we ensure that no citizen is disqualified from jury service because of his race.

… We decline, however, to formulate particular procedures to be followed upon a defendant’s timely objection to a prosecutor’s challenges.2424

V

In this case, petitioner made a timely objection to the prosecutor’s removal of all black persons on the venire. Because the trial court flatly rejected the objection without requiring the prosecutor to give an explanation for his action, we remand this case for further proceedings. If the trial court decides that the facts establish, prima facie, purposeful discrimination and the prosecutor does not come forward with a neutral explanation for his action, our precedents require that petitioner’s conviction be reversed.

It is so ordered.

. . .

Justice Marshall, concurring.

I join Justice Powell’s eloquent opinion for the Court, which takes a historic step toward eliminating the shameful practice of racial discrimination in the selection of juries. The Court’s opinion cogently explains the pernicious nature of the racially discriminatory use of peremptory challenges, and the repugnancy of such discrimination to the Equal Protection Clause. The Court’s opinion also ably demonstrates the inadequacy of any burden of proof for racially discriminatory use of peremptories that requires that “justice ... sit supinely by” and be flouted in case after case before a remedy is available. I nonetheless write separately to express my views. The decision today will not end the racial discrimination that peremptories inject into the jury-

22 22 While we respect the views expressed in Justice Marshall’s concurring opinion concerning prosecutorial and judicial enforcement of our holding today, we do not share them. The standard we adopt under the Federal Constitution is designed to ensure that a State does not use peremptory challenges to strike any black juror because of his race. We have no reason to believe that prosecutors will not fulfill their duty to exercise their challenges only for legitimate purposes. Certainly, this Court may assume that trial judges, in supervising voir dire in light of our decision today, will be alert to identify a prima facie case of purposeful discrimination. Nor do we think that this historic trial practice, which long has served the selection of an impartial jury, should be abolished because of an apprehension that prosecutors and trial judges will not perform conscientiously their respective duties under the Constitution.24 24 In light of the variety of jury selection practices followed in our state and federal trial courts, we make no attempt to instruct these courts how best to implement our holding today. For the same reason, we express no view on whether it is more appropriate in a particular case, upon a finding of discrimination against black jurors, for the trial court to discharge the [entire] venire and select a new jury from a panel not previously associated with the case, or to disallow the discriminatory challenges and resume selection with the improperly challenged jurors reinstated on the venire.

Page 144 of 201

selection process. That goal can be accomplished only by eliminating peremptory challenges entirely.a

. . .

Justice Rehnquist, with whom The Chief Justice joins, dissenting.

. . .

With these considerations in mind, we cannot hold that the striking of Negroes in a particular case is a denial of equal protection of the laws. In the quest for an impartial and qualified jury, Negro and white, Protestant and Catholic, are alike subject to being challenged without cause. To subject the prosecutor’s challenge in any particular case to the demands and traditional standards of the Equal Protection Clause would entail a radical change in the nature and operation of the challenge. The challenge, pro tanto, would no longer be peremptory.”

. . .

I cannot subscribe to the Court’s unprecedented use of the Equal Protection Clause to restrict the historic scope of the peremptory challenge, which has been described as “a necessary part of trial by jury.” In my view, there is simply nothing “unequal” about the State’s using its peremptory challenges to strike blacks from the jury in cases involving black defendants, so long as such challenges are also used to exclude whites in cases involving white defendants, Hispanics in cases involving hispanic defendants, Asians in cases involving Asian defendants, and so on. This case-specific use of peremptory challenges by the State does not single out blacks, or members of any other race for that matter, for discriminatory treatment. Such use of peremptories is at best based upon seat-of-the-pants instincts, which are undoubtedly crudely stereotypical and may in many cases be hopelessly mistaken. But as long as they are applied across-the-board to jurors of all races and nationalities, I do not see—and the Court most certainly has not explained—how their use violates the Equal Protection Clause.

. . .

Notes and Questions:

1. What general showing must be made to trigger a prima facie Batson violation? The specific steps are conveniently collated in Aleman v. Uribe, 723 F.3d 976, at 981–982 (9th Cir. 2013) (authorities omitted):

a a England, from which the United States drew its legal system, abolished peremptory challenges in 1986.

Page 145 of 201

‘A Batson challenge has three steps.’ At the first step, the defendant must make a prima facie showing that the prosecutor exercised a peremptory challenge based on race. If the court finds that a prima facie case has been made, then step two requires the prosecutor to give a race-neutral reason for exercising the challenge. Under Batson’s third step, the trial court must determine whether the defendant has carried his burden to prove that the prosecutor engaged in “purposeful discrimination.” To make this determination, the trial court must “evaluate ‘the persuasiveness of the justification.’ ” ‘Although the prosecutor's reasons for the strike must relate to the case to be tried, the court need not believe that ‘the stated reason represents a sound strategic judgment’ to find the prosecutor’s rationale persuasive; rather, it need be convinced only that the justification ‘should be believed.’ .......

2. Does the Rehnquist dissenting opinion suggest that his dissent is racially motivated? Is this the right question to ask, as a practical method for analyzing his dissent?

3. Should the federal courts abolish peremptory challenges, as has England? Would doing so promote forum shopping?

Page 146 of 201

GALLOWAY v. U.S.United States Supreme Court

319 U.S. 372 (1943)

Mr. Justice Rutledge delivered the [6-3] opinion of the Court.

Petitioner seeks benefits for total and permanent disability by reason of insanity he claims existed May 31, 1919. On that day his policy of yearly renewable term insurance lapsed for nonpayment of premium.1

The suit was filed June 15, 1938. At the close of all the evidence the District Court granted the Government’s motion for a directed verdict. Judgment was entered accordingly. The Circuit Court of Appeals affirmed. Both courts held the evidence legally insufficient to sustain a verdict for petitioner. …

The constitutional argument, as petitioner has made it, does not challenge generally the power of federal courts to withhold or withdraw from the jury cases in which the claimant puts forward insufficient evidence to support a verdict. The contention is merely that his case as made was substantial, the courts’ decisions to the contrary were wrong, and therefore their effect has been to deprive him of a jury trial. … Upon the record and the issues as the parties have made them, the only question is whether the evidence was sufficient to sustain a verdict for petitioner. On that basis, we think the judgments must be affirmed.

I.

Certain facts are undisputed. Petitioner [commenced his] … enlistment in the Army November 1, 1917.3 He became a cook in a machine gun battalion. His unit arrived in France in April, 1918. He served actively until September 24. From then to the following January he was in a hospital with influenza. He then returned to active duty. He came back to the United States, and received honorable discharge April 29, 1919. He enlisted in the Navy January 15, 1920, and was discharged for bad conduct in July. The following December he again enlisted in the Army and served until May, 1922, when he deserted. Thereafter he was carried on the Army records as a deserter.

In 1930 began a series of medical examinations by Veterans’ Bureau physicians. On May 19 that year his condition was diagnosed as ‘Moron, low grade; observation, dementia praecox, 1 1 The contract was issued pursuant to the War Risk Insurance Act and insured against death or total permanent disability. Pursuant to statutory authority, promulgated March 9, 1918, provided: ‘Any impairment of mind or body which renders it impossible for the disabled person to follow continuously any substantially gainful occupation shall be deemed … to be total disability. ‘Total disability shall be deemed to be permanent whenever it is founded upon conditions which render it reasonably certain that it will continue throughout the life of the person suffering from it…. ’3 3 … [T]here is no contention petitioner’s behavior was abnormal before he arrived in France in April, 1918.

Page 147 of 201

simple type.’ In November, 1931, further examination gave the diagnosis, ‘Psychosis with other diseases or conditions (organic disease of the central nervous system-type undetermined).’ In July, 1934, still another examination was made, with diagnosis: ‘Psychosis manic and depressive insanity incompetent; hypertension, moderate; otitis media, chronic, left; varicose veins left, mild; abscessed teeth roots; myocarditis, mild.’ …………………………………………………. Petitioner’s wife, the nominal party in this suit, was appointed guardian of his person and estate in February, 1932. Claim for insurance benefits was made in June, 1934, and was finally denied by the Board of Veterans’ Appeals in January, 1936. This suit followed two and a half years later.

Petitioner concededly is now totally and permanently disabled by reason of insanity and has been for some time prior to institution of this suit. It is conceded also that he was sound in mind and body until he arrived in France in April, 1918.

The theory of his case is that the strain of active service abroad brought on an immediate change, which was the beginning of a mental breakdown that has grown worse continuously through all the later years. Essential in this is the view it had become a total and permanent disability not later than May 31, 1919 [the policy lapse date].

The evidence to support this theory falls naturally into three periods, namely, that prior to 1923; the interval from then to 1930; and that following 1930. It consists in proof of incidents occurring in France to show the beginnings of change; testimony of changed appearance and behavior in the years immediately following petitioner’s return to the United States as compared with those prior to his departure; the medical evidence of insanity accumulated in the years following 1930; and finally the evidence of a physician, given largely as medical opinion, which seeks to tie all the other evidence together as foundation for the conclusion, expressed as of 1941, that petitioner’s disability was total and permanent as of a time not later than May of 1919.

Documentary exhibits included military, naval and Veterans’ Bureau records. Testimony was given by deposition or at the trial chiefly by five witnesses. One, O’Neill, was a fellow worker and friend from boyhood; two, Wells and Tanikawa, served with petitioner overseas; Lt. Col. Albert K. Mathews, who was an Army chaplain, observed him or another person of the same name at an Army hospital in California during early 1920; and Dr. Wilder, a physician, examined him shortly before the trial and supplied the only expert testimony in his behalf. The petitioner also put into evidence the depositions of Commander Platt and Lt. Col. James E. Matthews, his superior officers in the Navy and the Army, respectively, during 1920-22.

What happened in France during 1918-19 is shown chiefly by Wells and Tanikawa. Wells testified … [p]etitioner’s physical appearance was good, he ‘carried on his duties as a cook all right,’ and the witness did not see him after June 1….

Tanikawa, Hawaiian-born citizen, served with petitioner from the latter’s enlistment until September, 1918, when Galloway was hospitalized, although the witness thought they had

Page 148 of 201

fought together and petitioner was ‘acting queer’ at the Battle of the Argonne in October. At Camp Greene, North Carolina, petitioner was ‘just a regular soldier, very normal, … pretty neat.’ After reaching France ‘he was getting nervous…, kind of irritable, always picking a fight with other soldier[s].’ …

Tanikawa described another incident in June ‘when we were on the Marne,’ the Germans ‘were on the other side and we were on this side.’ It was a new front, without trenches. The witness and petitioner were on guard duty with others. Tanikawa understood the Germans were getting ready for a big drive. ‘One night he (petitioner) screamed. He said, ‘The Germans are coming’ and we all gagged him.’ There was no shooting, the Germans were not coming, and there was nothing to lead the witness to believe they were. Petitioner was court martialed for the matter, but Tanikawa did not know ‘what they did with him.’ He did not talk with Galloway that night, because ‘he was out of his mind’ and appeared insane. Tanikawa did not know when petitioner left the battalion or what happened to him after[wards]…. The witness next saw Galloway in 1936, at a disabled veterans’ post meeting in Sacramento, California. Petitioner then ‘looked to me like he wasn’t all there. Insane. About the same … as compared to the way he acted in France, particularly when they gagged him ….’

O’Neill was ‘born and raised with’ petitioner, worked with him as a longshoreman, and knew him ‘from when he come out of the army [1919] for seven years, I would say five or six years.’ When petitioner returned [from the Army] in April or May, 1919, ‘he was a wreck compared to what he was when he went away. The fellow’s mind was evidently unbalanced.’ Symptoms specified were withdrawing to himself; crying spells; alternate periods of normal behavior and nonsensical talk; expression of fears that good friends wanted ‘to beat him up’; spitting blood and remarking about it in vulgar terms. Once petitioner said, ‘G-d-it, I must be a Doctor Jekyll and Mr. Hyde.’

O’Neill testified these symptoms and this condition continued practically the same for about five years. In his opinion petitioner was ‘competent at times and others was incompetent.’ The intervals might be ‘a couple of days, a couple of months.’ In his normal periods Galloway ‘would be his old self … absolutely O.K.’

. . .

O’Neill maintained he saw petitioner ‘right on from that (1920) at times.’ … When he was pinned down by cross-examination, the effect of his testimony was that he recalled petitioner clearly in 1919 ‘because there was such a vast contrast in the man,’ but for later years he could give little or no definite information. The excerpt from the testimony set forth in the margin shows this contrast. … O’Neill recalled one specific occasion after 1919 when petitioner returned to Philadelphia, ‘around 1920 or 1921, but I couldn't be sure,’ to testify in a criminal proceeding. He also said, ‘After he was away for five or six years, he came back to Philadelphia, … and he was still just evidently all right, and then he would be off.’

Page 149 of 201

Lt. Col. (Chaplain) Mathews said he observed a Private Joseph Galloway, who was a prisoner for desertion and a patient in the mental ward at Fort MacArthur Station Hospital, California, during a six weeks period early in 1920. The chaplain’s testimony gives strong evidence the man he observed was insane. However, there is a fatal weakness in this evidence. … Subsequently he … admitted that he might have been mistaken in believing that the patient-prisoner was petitioner. … The record is barren of other evidence, whether by the hospital’s or the Army’s records or otherwise, to show that petitioner was either patient or prisoner at Fort MacArthur in 1920 or at any other time.

. . .

Lt. Col. James E. Matthews (not the chaplain) … was Galloway’s commanding officer from early 1921 to the summer of that year, when petitioner was transferred with other soldiers to another unit. … At times he ‘was one of the very best soldiers I had,’ at others undependable. He was physically sound, able to do his work, perform close order drill, etc., ‘very well.’ He had alternate periods of gaiety and depression, talked incoherently at times, gave the impression he would fight readily, but did not resent orders and seemed to get along well with other soldiers. The officer attributed petitioner’s behavior to alcohol and narcotics and it occurred to him at no time to question his sanity.

Dr. Wilder was the key witness. He disclaimed specializing in mental disease, but qualified as having given it ‘special attention.’ He first saw petitioner shortly before the [mid-1938] trial, examined him ‘several times.’ He concluded petitioner’s ailment ‘is a schizophrenic branch or form of praecox.’ Dr. Wilder … concluded petitioner was born with ‘an inherent instability,’ though he remained normal until he went to France; began there ‘to be subjected to the strain of military life, then he began to go to pieces.’ In May, 1919, petitioner ‘was still suffering from the acuteness of the breakdown. He is going down hill still, but the thing began with the breakdown….’ Petitioner was ‘definitely insane, yes, sir,’ in 1920 and ‘has been insane at all times, at least since July, 1918, the time of this episode on the Marne.’ … ‘At no time after he went into the war do we find him able to hold any kind of a job. He broke right down.’ He explained petitioner’s enlistment in the Navy and later in the Army by saying, ‘It would have been no trick at all for a man who was reasonably conforming to get into the Service.’

However, the witness knew ‘nothing whatever except his getting married’ about petitioner’s activities between 1925 and 1930…. Dr. Wilder at first regarded knowledge concerning what petitioner was doing between 1925 and 1930 as not essential. ‘We have a continuing disease, quite obviously beginning during his military service, and quite obviously continuing in 1930…. Counsel for the government interrupted to inquire, ‘Well, if he was continuously employed for eight hours a day from 1925 to 1930 would that have any bearing?’ The witness replied, ‘It would have a great deal.’ Upon further questioning, however, he reverted to his first position, stating it would not be necessary or helpful for him to know what petitioner was doing from 1925 to 1930….

Page 150 of 201

II.

This, we think, is the crux of the case…. His burden was to prove total and permanent disability as of a date not later than May 31, 1919. He has undertaken to do this by showing incipience of mental disability shortly before that time and its continuance and progression throughout the succeeding years. He has clearly established incidence of total and permanent disability as of some period prior to 1938, when he began this suit.9 For our purposes this may be taken as medically established by the Veterans’ Bureau examination and diagnosis of July, 1934.1010

But if the record is taken to show that some form of mental disability existed in 1930, which later became total and permanent, petitioner’s problem remains to demonstrate by more than speculative inference that this condition itself began on or before May 31, 1919 and continuously existed or progressed through the intervening years to 1930.

To show origin before the crucial date, he gives evidence of two abnormal incidents occurring while he was in France, one creating the disturbance before he came near the fighting front, the other yelling that the Germans were coming when he was on guard duty at the Marne. There is no other evidence of abnormal behavior during his entire service of more than a year abroad.

That he was court martialed for these sporadic acts and bound and gagged for one does not prove he was insane or had then a general breakdown. …………………………………… . . .

To these two incidents petitioner adds the testimony of O’Neill that he looked and acted like a wreck, compared with his former self, when he returned from France about a month before the crucial date, and O’Neill’s vague recollections that this condition continued through the next two, three, four or five years.

O’Neill’s testimony … does no more than show that petitioner was subject to alternating periods of gaiety and depression for some indefinite period after his return, extending perhaps as late as 1922. But because of its vagueness as to time, dates, frequency of opportunity for observation, and specific incident, O’Neill’s testimony concerning the period from 1922 to 1925 is hardly more than speculative.

9 9 He has not established a fixed date at which contemporaneous medical examination, both physical and mental, establishes totality and permanence prior to Dr. Wilder’s examinations in 1941. …10 10 The previous examinations of 1930 and 1931 … without more do not prove existence of total and permanent disability; on the contrary, they go far toward showing it could not be established then medically. The 1930 diagnosis shows only that the examiner regarded petitioner as a moron of low grade, and recommended he be observed for simple dementia praecox. … The 1931 examination is even less conclusive in one respect, namely, that ‘psychosis’ takes the place of moronic status. … However, this examination first indicates existence of organic nervous disease. Not until the 1934 diagnosis is there one which might be regarded as showing possible total and permanent disability by medical evidence contemporaneous with the fact italics added].

Page 151 of 201

… There is also the testimony of Commander Platt and Lt. Col. James E. Matthews as to his service in the Navy and the Army, respectively, during 1920-1922. Neither thought petitioner was insane or that his conduct indicated insanity. Then follows a chasm of eight years. The only evidence we have concerning this period is the fact that petitioner married his present guardian at some time within it, an act from which in the legal sense no inference of insanity can be drawn.

This period was eight years of continuous insanity, according to the inference petitioner would be [arguably] allowed to have drawn. If so, he should have no need of inference. Insanity so long and continuously sustained does not hide itself from the eyes and ears of witnesses.13 13 …

Inference is capable of bridging many gaps. But not, in these circumstances, one so wide and deep as this. Knowledge of petitioner’s activities and behavior from 1922 or 1925 to 1930 was peculiarly within his ken and that of his wife, who has litigated this cause in his and presumably, though indirectly, in her own behalf. His was the burden to show continuous disability. What he did in this time, or did not do, was vital to his case. Apart from the mere fact of his marriage, the record is blank for five years and almost blank for eight. For all that appears, he may have worked full time and continuously for five and perhaps for eight, with only a possible single interruption.

No favorable inference can be drawn from the omission. It was not one of oversight or inability to secure proof. That is shown by the thoroughness with which the record was prepared for all other periods, before and after this one, and by the fact petitioner’s wife, though she married him during the period and was available, did not testify. The only reasonable conclusion is that petitioner, or those who acted for him, deliberately chose, for reasons no doubt considered sufficient (and which we do not criticize, since such matters including tactical ones, are for the judgment of counsel) to present no evidence or perhaps to withhold evidence readily available concerning this long interval, and to trust to the genius of expert medical inference and judicial laxity to bridge this canyon.

13 13 The only attempt to explain the absence of testimony concerning the period from 1922 to 1930 is made

by counsel in the reply brief: ‘The insured, it will be observed, was never apprehended after his desertion from the

Army in 1922. It is only reasonable that a person with the status of a deserter at large…, whose mind was in the

condition of that of this insured, would absent himself from those with whom he would usually associate because of

fear of apprehension and punishment. … The ‘explanation’ is obviously untenable. It ignores the one fact proved

with relation to the period, that petitioner was married during it. His wife was … obviously available as a witness.

…

Page 152 of 201

… No case has been cited and none has been found in which inference, however expert, has been permitted to make so broad a leap and take the place of evidence which, according to all reason, must have been at hand. To allow this would permit the substitution of inference, tenuous at best, not merely for evidence absent because impossible or difficult to secure, but for evidence disclosed to be available and not produced. This would substitute speculation for proof. Furthermore, the inference would be more plausible perhaps if the evidence of insanity as of May, 1919, were stronger than it is, such for instance as Chaplain Mathews' testimony would have furnished if it could be taken as applying to petitioner. But, on this record, the evidence of insanity as of that time is thin at best, if it can be regarded as at all more than speculative.

Beyond this [speculation], there is nothing to show totality or permanence. … But eight years are too many to permit it to skip, when the bridgeheads (if the figure may be changed) at each end are no stronger than they are here.

. . .

Notes and Questions:

1. What did Galloway have to prove, to win his case? (If the case context were a summary judgment hearing, the relevant question would be “What is the disputed material fact?”)

2. What role did the various witnesses play in resolving that issue? In a key passage, the Court restates Dr. Wilder’s conclusion that Galloway

remained normal until he went to France; began there ‘to be subjected to the strain of military life, then he began to go to pieces.’ In May, 1919, petitioner ‘was still suffering from the acuteness of the breakdown.… ’ Petitioner was ‘definitely insane, yes, sir,’ in 1920 and ‘has been insane at all times, at least since July, 1918, the time of this episode on the Marne.’

Why did this testimony not resolve the issue?

3. One can rely on facts established at trial to avoid a directed verdict (now a pre-verdict FRCP 50(a) Motion for Judgment in federal court). Other than documents, not at issue in Galloway, one can also rely on a related matter to establish proof of a claim or defense. What was it that plaintiff Galloway wanted to use in support of his position that he could withstand a directed verdict attack on his trial evidence?

Page 153 of 201

4. One potential witness was noticeably absent from the proceedings. Is it possible that gap in Galloway’s case played a pivotal role in the decision to grant (and affirm) a directed verdict against Mr. Galloway?

5. The remainder of Galloway addresses plaintiff’s argument that the Seventh Amendment right to jury trial prohibits the directed verdict motion (now FRCP 50 Motion for Judgment). The predecessors of today’s pre-verdict and post-verdict Motions for Judgment—as well as the Motion for New Trial—existed at the time of passage of the Seventh Amendment. Note its concluding savings clause. These motions actually exist to aid the right to jury, especially in cases where plaintiffs like Galloway fail to produce enough trial evidence to make the case jury-worthy.

Page 154 of 201

DENMAN v. SPAINSupreme Court of Mississippi

135 So.2d 195 (1961)

Lee, Presiding Justice.

Betty Denman, a minor, by her mother … Joyce H. Denman, sued Mrs. Phina Ross Spain, executrix of the estate of Joseph A. Ross, deceased, to recover damages for personal injuries sustained by her, allegedly resulting from the negligence of the decedent in the operation of an automobile. The issue was submitted to a jury on the evidence for the plaintiff—no evidence being offered for the defendant—and there was a verdict and judgment for the plaintiff in the sum of $5,000. However, on motion of the defendant, a judgment non obstante veredicto, that is, notwithstanding the verdict, was sustained and entered. From that action, the plaintiff has appealed.a

. . .

The appellant contends that the evidence offered by her, together with the reasonable inferences therefrom, was sufficient to make an issue for the jury as to whether the alleged negligence of the deceased driver, Ross, proximately caused or contributed to the collision and the consequent damage; and that it was error to set aside the verdict of the jury … [whereby the court instead] entered the judgment for the defendant, notwithstanding that verdict. Hence, she says that such judgment should be reversed, and that the verdict and judgment of the jury should be reinstated.

. . .

Sunday, March 23, 1958, was a rainy, foggy day. About six o’clock that afternoon, at dusk, Mrs. Eva B. Denman, accompanied by her granddaughter, Betty, the plaintiff, was driving her Ford car southward on U. S. Highway 49E. At that time, Joseph A. Ross … was driving his Plymouth car northward on said highway. … [T]he cars collided. Mrs. Denman … and Ross were killed. Betty, nearly seven years of age at the time, and Mrs. Haining [a Ross passenger] were injured. Neither had any recollection of what had happened at the time of the collision. Betty, lying in water on her back in a ditch on the east side of the road, cried out and was rescued by some unknown person.

a a Betty filed an earlier suit in Mississippi against Mack Denman, administrator of the estate of Mrs. Eva B.

Denman [Betty’s grandmother], deceased; but, at the close of Betty’s evidence, the court sustained a directed verdict

for the defendant. On appeal the judgment … was affirmed by this Court on November 6, 1961….

Page 155 of 201

Sources: <http://www.aaroads.com/shields/img/MS/ <http://upload.wikimedia.org/wikipedia/commons/thumb/ MS19480491i1.jpg> 2/2d/Highway49TutwilerMS.jpg/800px- Highway49TutwilerMS.jpg>

Reprinted with Permission of Michael Summa Reprinted with Permission of Mark Low

Plaintiff’s father, Stuart Denman, who went to the scene shortly after the collision, described the situation substantially as follows: The Ford car was about seven yards off the paved surface on the east side in a bar pit ‘heading back towards the railroad track, which is in an easterly direction.’ The engine and transmission were on the opposite side of the road, out of the car and about fifty yards apart. The Plymouth was also on the east side, facing west, about fifteen yards north of the Ford.

No proof was offered as to skid marks, or other evidence to show the point of contact between these two vehicles. Eleven photographs of the damaged Plymouth, taken from various positions, and thirteen pictures of the damaged Ford, also taken from various positions, other than being mute evidence of a terrible tragedy, depict no reasonable or plausible explanation as to why this collision occurred, or who was responsible for it. Three other photographs portraying the topography of this immediate area, afford no excuse whatever for such grievous human error.

… John Barnett testified that he was driving a Dodge pickup north of highway 49E on his way to Tutwiler; that he was traveling at a speed of fifty or fifty-five miles per hour; that the [Ross] Plymouth, which was in the wreck, passed him about three-fourths of a mile south of where the collision occurred, going at a speed of about seventy miles per hour; that when it passed, it got back in its lane, and neither wavered nor wobbled thereafter; that he followed and observed it for a distance of forty or fifty yards, and that it stayed in its proper lane as long as he saw it. Although another car was on the road ahead of him, he could have seen as far as the place of the accident except for the rain and fog.

... Hal Buckley, a Negro man, testified that he was also traveling north on 49E on his way to Tutwiler at a speed of forty to fifty miles per hour. About two hundred yards south of the place where the collision occurred, a light green Plymouth, which he later saw at the scene of the accident, passed him at a speed of seventy-five or eighty miles an hour. He could see its taillights after it passed, and ‘he was just steady going; he wasn’t doing no slowing up.’ He saw it until it

Page 156 of 201

ran into the other car. On cross-examination, he said that, after this car passed him, it got back on its side of the road, drove straight, and he did not notice that it ever went back over the center. Also on cross-examination, in an effort at impeachment, a part of the transcript in the other trial, containing this question and answer, was read to him as follows: ‘What do you estimate the speed of that car was when it passed you—the one that was going the same direction that you were?’, and the answer was: ‘Well, I don't have no idea.’ When he was asked why he made this difference in his testimony, he hesitated and replied, ‘I didn’t give no sorta idea how fast he was going.’ He then admitted that, when the car passed him, it got back on its side and drove straight ahead, and that he could see the accident, but he could not tell anything about it or on which side of the road it happened. He also did not notice the other car, which came from the other direction.

. . .

From this evidence, the plaintiff reasons that the jury could, and did, find that the Ross car was being operated, under inclement weather conditions, at an unlawful and negligent rate of speed, and that, if Ross had had his car under adequate and proper control, in all probability the collision could have been avoided. She voices the opinion that the physical facts, including the pictures of the wrecked vehicles, indicated that the Ford car was probably across the highway at an angle of perhaps forty-five degrees at the time of the collision.

But the testimony of Buckley showed only that the Plymouth was being operated at an excessive and negligent rate of speed. It otherwise showed that the car was in its proper lane. He did not notice it go over the center at any time, but it was driven straight down the road. No eyewitness claimed to have seen what happened. There was no evidence to indicate the place in the road where the vehicles came in contact with each other. There was no showing as to the speed of the Ford, whether fast or slow; or as to whether it was traveling on the right or wrong side of the road; or as to whether it slid or was suddenly driven to the wrong side of the road into the path of the Plymouth. The cars were so badly damaged that the pictures afford no reasonable explanation as to what person or persons were legally responsible for their condition. In other words, just how and why this grievous tragedy occurred is completely shrouded in mystery.

The burden was on the plaintiff to prove, by a preponderance of the evidence, not only that the operator of the Plymouth was guilty of negligence but also that such negligence proximately caused or contributed to the collision and consequent damage. By the use of metaphysical learning, speculation and conjecture, one may reach several possible conclusions as to how the accident occurred. However such conclusions could only be classed as possibilities; and this Court has many times held that verdicts cannot be based on possibilities. At all events, there is no sound or reasonable basis upon which a jury or this Court can say that the plaintiff met that burden.

The judgment [granting the j.n.o.v.] must be affirmed.

Page 157 of 201

Affirmed.

Notes and Questions:

1. As the court states: “The issue was submitted to a jury on the evidence for the plaintiff—no evidence being offered for the defendant.” The defendant ultimately prevailed. Why?

2. How did the plaintiff hope to prove—although there was no accident eyewitness, and the two dozen pictures were inconclusive—that Ross caused the accident?

3. You have now read a case on successful pre-verdict and post-verdict attacks on the plaintiff’s evidence. The respective motions were for directed verdict and judgment notwithstanding the verdict. They are called a motion for judgment and renewed motion for judgment in federal court. This is merely a difference in nomenclature. What then is the difference between a FRCP 50(a) and 50(b) motion?

Page 158 of 201

LATINO v. KAIZER United States Court of Appeals

58 F.3d 310 (7th Cir. 2014)

SHARP, Chief District Judge.

The defendants-appellants, police officer Edward Kaizer and the City of Chicago, appeal a jury award of damages against them in favor of plaintiffs-appellees Daniel Latino and Robert Slawinski for arrest without probable cause and false imprisonment. The plaintiffs’ jury award came after the second trial in this case;a the first jury trial found in favor of the defendants, but that verdict was vacated by the district judge on a post-trial motion under Federal Rule of Civil Procedure 59. The second jury awarded the plaintiffs $5500.00 each, and the district judge then awarded plaintiffs $120,113.50 in attorney fees and $1,019.34 in expenses.... Latino and Slawinski sued Chicago and two officers, Kaizer and William Gordon, under the state common law tort of false imprisonment and 42 U.S.C. § 1983 for alleged violations of their Fourth and Fourteenth Amendment rights. The plaintiffs were arrested by Officer Kaizer and an undetermined second officer on June 2, 1991 for ticket scalping2 at the first Bulls–Lakers game in the final round of the NBA playoffs. All agree that the arrest occurred the night of June 2, 1991 outside the Chicago Stadium, but there ends the similarities between the parties’ stories. ... [T]he district judge found that the officers’ version of events was perjury, and absent that testimony, the jury’s [original] verdict for the defendants was against the weight of the evidence [which is a common basis for both the Motion for Judgment and for New Trial]. Because this court finds that the first jury verdict should not have been vacated, it reinstates that verdict in favor of the defendants [because the new trial motion should not have been granted].  Police Officers’ Testimony This case boils down to a swearing contest between the police officers and the plaintiffs. Officers Kaizer and Scornavacco testified that they were undercover at the Stadium, assigned to patrol on foot before the game to apprehend pickpockets and ticket scalpers. The officers spotted Latino and Slawinski on the north side of Madison Street walking west toward Gate 1 of the Stadium building, each holding something in his hand. The officers separated and crossed the street after the plaintiffs. Kaizer stated that he saw Latino and Slawinski stopped by a couple of people in front of Gate 1, and he walked over and joined the group. Latino and Slawinski were standing side-by-side, and each was holding a pair of tickets. While Officer Scornavacco walked about 10 to 15 feet behind the plaintiffs, Kaizer heard

a a The defendants did not appeal the district judge’s grant of a new trial—and instead proceeded with the second trial—because an order granting a new trial is not a final order. 2 2 ... In the absence of officer testimony, on August 14, 1991 the judge dismissed the quasi-criminal complaint.

Page 159 of 201

someone in the crowd ask, “Well, what kind of seats are they?” Both plaintiffs replied that they were good seats. Kaizer then heard someone ask, “How much are they?” He did not hear the reply, but did hear someone comment “I don’t want to pay that.” Officer Kaizer repeated the question himself, asking Latino and Slawinski “How much are they?” Latino responded “$150.” Officer Kaizer then looked at Slawinski and asked, “And yours?” Slawinski responded “$150” as well.

After the game started around 2:30 p.m., the officers left the stadium for the ... police station. While Officer Kaizer processed the arrestees, he removed the confiscated tickets from his pocket and separated them from the identification cards, and placed them in individual inventory envelopes assigned to each arrestee. Latino and Slawinski were then locked up and were later released on recognizance bonds.

Plaintiffs’ Testimony The plaintiffs’ version of events was strikingly different. ... He [Latino] testified that as of the morning of June 2, 1991, he had received two tickets for the game.... Latino invited Slawinski ... to attend the game with him. They met Latino’s boss [Monus] ... and approximately eight other people ... for lunch ... near downtown Chicago. Monus took the tickets from the people at the luncheon and redistributed them. Monus took Latino’s two tickets, but gave him back four. He informed Latino that the extra two tickets should be given to ... [their customers]. Latino and Slawinski drove in Latino’s car to the stadium. ... Latino then spotted an acquaintance, Richard Scrima, in a parking lot on the south side of Madison Street. They crossed to the south side of the street and Latino went up to Scrima; Slawinski stopped about ten or twenty feet before Latino did. Latino informed Scrima that he had extra tickets to the game, and asked him whether he had seen anyone [customers] from the industry, or for any suggestions about what to do with his extra tickets. Scrima testified that he offered to buy the tickets, but Latino refused. . . . Just after Latino walked away from Scrima he was tapped on the shoulder by Officer Kaizer, who told him he was under arrest for scalping and cuffed his right wrist. Kaizer led Latino toward Slawinski (who then was standing not more than ten feet away). At this point Scrima noticed that Latino had been arrested, and stated that this had all occurred in about 25 or 30 seconds. Slawinski walked towards Latino, and was asked by another plainclothes officer (either Gordon or Scornavacco) if he knew Latino. When Slawinski said that Latino was a friend of his, the second officer cuffed Slawinski’s left wrist to the other end of the cuff on Latino’s right wrist. Officer Kaizer asked Latino for identification and Latino told him it was in his car. Kaizer asked how many tickets he had, and Latino replied four. Kaizer did not request the tickets. Kaizer led Latino and Slawinski to the parking lot where they were turned over to another officer. Slawinski testified that Kaizer did not ask for the tickets until they were at the station.

Page 160 of 201

When asked for them, Latino gave Kaizer all four. Slawinski said he had no tickets. ...

Post–Trial Motions The jury in the first [civil] trial found in favor of the defendants, Officers Kaizer and Gordon and the City of Chicago. The plaintiffs filed post-trial motions under Rules 50 and 59 with the district judge, requesting a new trial. The district judge denied the Rule 50 motion for judgment as a matter of law. He acknowledged that the admissible evidence presented by the defense, if believed by the jury, supported the defendants’ verdict. However, Judge Shadur granted a new trial under Rule 59, finding that the police officers’ testimony was perjury, and when the perjurious testimony was stricken, the verdict was against the weight of the remaining evidence. ... Discussion The plaintiffs-appellees attempt to reargue the facts before this court and show that their version of events was more believable. Such is not our role. We must decide only whether the district judge properly vacated the first jury verdict. . . .

Judge Shadur was firm in his belief that the two different versions of events in this case were not merely a “swearing contest” between the parties. He believed that the officers’ account of events was objectively and inherently improbable, and was therefore perjury. ... Judge Shadur ... could not believe that two men would make a special trip to the stadium to sell their seats to such “an extraordinary occasion” (despite the $600 profit at stake).... [By] [e]xcluding the officers’ testimony, the verdict for the defendants was of course against the weight of the evidence. This court must determine whether Judge Shadur correctly applied the law in deciding to exclude the officers’ testimony as perjury.

Appellate review of a district court’s order for a new trial is limited. Because the trial judge is uniquely situated to rule on such a motion, the district court has great discretion in determining whether to grant a new trial. Therefore, in reviewing the new trial order, we do not seek to substitute our judgment for the trial judge’s decision that a new trial was appropriate; “We seek only to determine whether he abused his discretion.” When the trial judge disagrees with a jury verdict, the Seventh Amendment’s limitations on the judge’s power to reexamine the jury’s verdict is implicated and a more exacting standard of review applies. Nonetheless, the district judge’s determination still warrants substantial deference. In cases involving simple issues but highly disputed facts (an apt description of this case), greater deference should be afforded the jury’s verdict than in cases involving complex issues with facts not highly disputed. (“Where the subject matter of the litigation is simple and within a layman’s understanding, the district court is given less freedom to scrutinize the jury’s verdict than in a case that deals with complex factual determinations.”). [An omitted case] also notes that the grant of a motion for a new trial begs more stringent review than a denial, and a still more rigorous review when the basis of the motion was the weight of the evidence.

... [N]ew trials granted because the verdict is against the weight of the evidence are

Page 161 of 201

proper only when the record shows that the jury’s verdict resulted in a miscarriage of justice or where the verdict, on the record, cries out to be overturned or shocks our conscience. In his oral ruling ..., Judge Shadur invoked the memory of a giant of the federal judiciary in a bygone era, Chief Judge John Barnes of the United States District Court in Chicago. ... Barnes said essentially, “In these cases I sit as the 13th juror. As I listened to the evidence I was convinced that there was major perjury presented to the jury. Unfortunately, the jury didn’t recognize it, but I grant a new trial because the jury verdict was against the manifest weight of the evidence.” The existence or not of the “13th juror rule” is a debate which need not be decided here. It is unlikely that even Chief Judge Barnes would have argued that a United States district judge has an absolute veto to set aside any civil jury verdict which that judge finds distasteful.

There are statements in the cases that, in ruling on the motion, the trial judge acts as a 13th juror. Properly understood and applied, no fault can be found with them for the judge does act to evaluate and weigh the evidence. But while he has a responsibility for the result no less than the jury, he should not set the verdict aside as against the weight of the evidence merely because, if he had acted as trier of the fact, he would have reached a different result; and in that sense he does not act as a 13th juror in approving or disapproving the verdict. And since the credibility of witnesses is peculiarly for the jury, it is an invasion of the jury’s province to grant a new trial merely because the evidence was sharply in conflict.

The district judge can take away from the jury testimony that reasonable persons could not believe. However, that exception is a narrow one, and can be invoked only where the testimony contradicts indisputable physical facts or laws [italics added]. Judge Shadur stated quite clearly his belief that the officers’ testimony in the case now before us fell within that narrow exception. With all deference, we can not agree. . . .

The district judge found that the officers’ testimony was perjury and therefore should not have provided a basis for the jury’s decision. Once he decided to exclude the officers’ testimony, then of course the jury verdict for the defendants was against the weight of the evidence. Judge Shadur’s finding that the police officers’ testimony was perjury was not based on their demeanor. He very carefully and precisely set forth the basis of his finding, which was that the officers’ story was inconsistent with his view of the physical evidence and was “at war with common sense.” Judge Shadur believed the officers’ testimony was objectively and inherently improbable to the extent that they must be lying. This court ... finds that Judge Shadur’s decision was an abuse of discretion. The jury’s verdict could only be disturbed under the narrowest of circumstances, which simply do not exist in this case. It does not contradict the laws of nature to believe that two men would rather receive $600 than attend a Bulls–Lakers game, and the district judge was not at

Page 162 of 201

liberty to effectively take that testimony away from the jury in deciding that the verdict was against the weight of the evidence. ... [I]t was the jury which had the duty to weigh the evidence, and we do not agree that the officers’ testimony was so physically impossible or contrary to the evidence as to provide a legitimate basis for in effect excluding it from the jury’s consideration.

... Preferring to sell all of one’s tickets for a steep profit rather than to actually attend a Bulls–Lakers game might seem inherently incredible to a diehard fan, but legally it is not so.

It must be remembered that Latino and Slawinski had lunched together with Latino’s boss in downtown Chicago before the game. It was there that they were given the four tickets at issue. Judge Shadur believed [officer] Kaizer’s account of Slawinski’s and Latino’s actions could only support the inference that all four tickets were for sale. Perhaps so. Perhaps at first they planned to go to the game, but later decided to sell all of the tickets when they realized how much money they could get for them. Such is not a metaphysical impossibility; in fact there are many likely reasons to decide to sell all four tickets. Unlike cases involving complicated legal concepts, many jurors would have personal experience with identical situations. The jurors were in the best position to decide the rationality or reasonableness of the scalping charge. Such a scenario cannot be considered to be outside the realm of possibility, and Judge Shadur should not have overridden the jury verdict on that basis.

... For $300 per pair, whether the men would choose to sell both pairs and watch the game in a bar or sell one pair and watch it in person, either scenario is well within the range of reasonable human behavior, and likewise within the experience and understanding of the jury. . . .This was a credibility-based decision—a swearing contest. The evidence for each side was essentially equal; it was merely a matter of whom to believe. “And since the credibility of witnesses is peculiarly for the jury, it is an invasion of the jury’s province to grant a new trial merely because the evidence was sharply in conflict.” The jury spoke its verdict, and the Seventh Amendment affords it very considerable deference. Judge Shadur usurped the jury’s role in deciding the most reasonable inferences from the evidence. That flies in the face of the Seventh Amendment, and goes beyond the power of the district judge under Rule 59. With all deference, the grant of a new trial in this case was an abuse of discretion. It must most respectfully be decided here that with all good intentions the district judge did indeed cross the boundaries when he determined that the jury should not have been permitted to credit the officers’ testimony. The officers’ testimony was not objectively false, and excluding it after the fact second-guesses the jury in a way that strikes at the very heart of the Seventh Amendment. Judge Shadur certainly must be commended for his intellectual honesty and candor, but this court must be equally intellectually honest and candid in saying that the boundary was indeed crossed. ... Therefore, the verdict in the first trial must stand, which obviates the necessity of dealing with the other issues which are here presented. On these bases, the decision to grant a new trial in the first trial is reversed, and this case is remanded with instructions to reinstate the jury’s verdict for the defendants in the first trial. Notes and Questions:

Page 163 of 201

1. The district judge denied the Rule 50 motion for judgment. He acknowledged that the evidence presented by the defense supported the defendant officers’ version. However, Judge Shadur simultaneously granted a new trial motion under Rule 59. Do these rulings seem consistent? Consider the following distinction from Marsh v. Illinois Cent. R. Co., 175 F.2d 498, 500 (5th Cir. 1949):

A motion for a directed verdict, or for a judgment notwithstanding the verdict under Rule of Civil Procedure 50 [now Motion for Judgment], raises a question of law only: Whether there is any evidence which, if believed, would authorize a verdict against movant. The trial judge in considering those motions does not exercise discretion, but makes a ruling of law, and if he errs the appellate court may reverse. A motion for new

trial is addressed to the trial judge’s discretion. He may grant a new trial if he thinks he has committed error; and he may grant one (and he alone can) because he thinks the verdict is wrong, though supported by some evidence. The exercise of his discretion is not ordinarily reviewable on appeal, though a failure to exercise discretion, or an abuse of it, may be corrected. The motion for a new trial is entirely independent of the other two motions [pre- and post-verdict] and is governed by different principles, and has a different result. It never supersedes the jury, but as its name states, it results in another jury trial, perhaps with different evidence produced. But the motion for directed verdict or for judgment notwithstanding the verdict if granted, ends the case.

2. Did the new trial motion depend on whether the officers actually perjured themselves at trial? 3. The appellate court notes that “the district judge’s determination still warrants substantial deference.” Is that concept consistent with the Seventh Amendment right to jury trial? Does the result—that the trial judge’s perjury-based exclusion of the officers’ evidence—support the theme that trial judge’s are entitled to “substantial deference?” 4. The appellate court further comments that the “grant of a motion for a new trial begs more stringent review than a denial.” Why is that so?

Page 164 of 201

CURTISS-WRIGHT CORP. v. GENERAL ELEC. CO.United States Supreme Court

446 U.S. 1 (1980)

Mr. Chief Justice Burger delivered the [unanimous] opinion of the Court.

Federal Rule of Civil Procedure 54(b) allows a district court dealing with multiple claims or multiple parties to direct the entry of final judgment as to fewer than all of the claims or parties; to do so, the court must make an express determination that there is no just reason for delay. We granted certiorari in order to examine the use of this procedural device.

I

... [R]espondent General Electric Co. entered into a series of 21 contracts with petitioner Curtiss-Wright Corp. for the manufacture of components designed for use in nuclear powered naval vessels. These contracts had a total value of $215 million.

... Curtiss-Wright brought a diversity action in the United States District Court for the District of New Jersey, seeking damages and reformation with regard to the 21 contracts. The complaint asserted claims based on alleged fraud, misrepresentation, and breach of contract by General Electric. It also sought $19 million from General Electric on the outstanding balance due on the contracts already performed.

General Electric counterclaimed for $1.9 million in costs allegedly incurred as the result of “extraordinary efforts” provided to Curtiss-Wright during performance of the contracts which enabled Curtiss-Wright to avoid a contract default. General Electric also sought, by way of counterclaim, to recover $52 million by which Curtiss-Wright was allegedly unjustly enriched as a result of these “extraordinary efforts.”

The facts underlying ... [the] counterclaims are in dispute. ... [Seller] Curtiss-Wright ... claims ... [a] $19 million balance due....

The District Court ... granted summary judgment for Curtiss-Wright on this otherwise undisputed claim. ... The court also ruled that Curtiss-Wright was entitled to prejudgment interest at the New York statutory rate of 6% per annum.

Curtiss-Wright then moved for a certification of the District Court’s orders as final judgments under [a former but comparable version of] Federal Rule of Civil Procedure 54(b), which provides:

Page 165 of 201

When more than one claim for relief is presented in an action, whether as a claim, counterclaim, cross-claim, or third-party claim, or when multiple parties are involved, the court may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment. ...

The court expressly directed entry of final judgment for Curtiss-Wright and made the determination that there was “no just reason for delay” pursuant to Rule 54(b).

The District Court also provided a written statement of reasons supporting its decision to certify the judgment as final. It acknowledged that Rule 54(b) certification was not to be granted as a matter of course, and that this remedy should be reserved for the infrequent harsh case because of the overload in appellate courts which would otherwise result from appeals of an interlocutory nature. The essential inquiry was stated to be “whether, after balancing the competing factors, finality of judgment should be ordered to advance the interests of sound judicial administration and justice to the litigants.”

The District Court then went on to identify the relevant factors in the case before it. It found that certification would not result in unnecessary appellate review; that the claims finally adjudicated were separate, distinct, and independent of any of the other claims or counterclaims involved; that review of these adjudicated claims would not be mooted by any future developments in the case; and that the nature of the claims was such that no appellate court would have to decide the same issues more than once even if there were subsequent appeals.

Turning to considerations of justice to the litigants, the District Court found that Curtiss-Wright would suffer severe daily financial loss from nonpayment of the $19 million judgment because current interest rates were higher than the statutory prejudgment rate, a situation compounded by the large amount of money involved. The court observed that the complex nature of the remaining claims could, without certification, mean a delay that “would span many months, if not years.”

The court found that solvency of the parties was not a significant factor, since each appeared to be financially sound. Although the presence of General Electric’s counterclaims and the consequent possibility of a setoff recovery were factors which weighed against certification, the court, in balancing these factors, determined that they were outweighed by the other factors in the case. Accordingly, it granted Rule 54(b) certification. It also granted General Electric’s motion for a stay without bond pending appeal.a

a a One potential downside with a stay is that the trial proceedings are temporarily frozen, pending resolution of the appeal.

Page 166 of 201

A divided panel of the United States Court of Appeals for the Third Circuit held that the case was controlled by its decision in Allis-Chalmers Corp. v. Philadelphia Electric Co., 521 F.2d 360 (1975), where the court had stated:

In the absence of unusual or harsh circumstances, we believe that the presence of a counterclaim, which could result in a set-off against any amounts due and owing to the plaintiff, weighs heavily against the grant of 54(b) certification. ...

In Allis-Chalmers, the court defined unusual or harsh circumstances as those factors “involving considerations of solvency, economic duress, etc.” ............................................... In the Third Circuit’s view, the question was which of the parties should have the benefit of the amount of the balance due pending final resolution of the litigation. The court held that Allis-Chalmers dictated “that the matter remain in status quo when non-frivolous counterclaims are pending, and in the absence of unusual or harsh circumstances.” The Court of Appeals acknowledged that Curtiss-Wright’s inability to have use of the money from the judgment might seem harsh, but noted that the same could be said for General Electric if it were forced to pay Curtiss-Wright now but later prevailed on its counterclaims. .............................................. The [Curtiss-Wright] Court of Appeals concluded that the District Court had abused its discretion by granting Rule 54(b) certification in this situation and dismissed the case for want of an appealable order; it also directed the District Court to vacate its Rule 54(b) determination of finality. ... We reverse. ...................................................................................................................... II Nearly a quarter of a century ago, in Sears, Roebuck & Co. v. Mackey,b this Court outlined the steps to be followed in making determinations under Rule 54(b). A district court must first determine that it is dealing with a[n effectively] “final judgment.” It must be a “judgment” in the sense that it is a decision upon a cognizable claim for relief, and it must be “final” in the sense that it is “an ultimate disposition of an individual claim entered in the course of a multiple claims action.” ........ .................................................................................................. Once having found finality, the district court must go on to determine whether there is any just reason for delay. Not all final judgments on individual claims [disposing of less than all claims] should be immediately appealable, even if they are in some sense separable from the remaining unresolved claims. The function of the district court under the Rule is to act as a “dispatcher.” It is left to the sound judicial discretion of the district court to determine the “appropriate time” when each final decision in a multiple claims action is ready for appeal. This discretion is to be exercised “in the interest of sound judicial administration.” ...............................

Thus, in deciding whether there are no just reasons to delay the appeal of individual final judgments in setting such as this, a district court must take into account judicial administrative b b FRCP 54(b) was properly invoked where the federal segment of a federal antitrust and related state law complaint was dismissed, leaving only the state law issues to be resolved.

Page 167 of 201

interests as well as the equities involved. Consideration of the former is necessary to assure that application of the Rule effectively “preserves the historic federal policy against piecemeal appeals.” It was therefore proper for the District Judge here to consider such factors as whether the claims under review were separable from the others remaining to be adjudicated and whether the nature of the claims already determined was such that no appellate court would have to decide the same issues more than once even if there were subsequent appeals.2 ........................... Here the District Judge saw no sound reason to delay appellate resolution of the undisputed claims already adjudicated. The contrary conclusion of the Court of Appeals was strongly influenced by the existence of non-frivolous counterclaims. The mere presence of such claims, however, does not render a Rule 54(b) certification inappropriate. If it did, Rule 54(b) would lose much of its utility. In [citation omitted], this Court explained that counterclaims, whether compulsory or permissive, present no special problems for Rule 54(b) determinations; [thus] counterclaims are not to be evaluated differently from other claims. Like other claims, their significance for Rule 54(b) purposes turns on their interrelationship with the claims on which certification is sought. Here, the District Judge determined that General Electric’s counterclaims were severablec from the claims which had been determined in terms of both the factual and the legal issues involved. The Court of Appeals did not conclude otherwise. What the Court of Appeals found objectionable about the District Judge’s exercise of discretion was the assessment of the equities involved. The Court of Appeals concluded that the possibility of a setoff [via G.E.’s potential success on its counterclaim] required that the status quo be maintained unless petitioner could show harsh or unusual circumstances; it held that such a showing had not been made in the District Court. .................................................................... . . . .......................................................................... In Sears, the Court stated that the decision to certify was with good reason left to the sound judicial discretion of the district court. ... Admittedly this presents issues not always easily resolved, but the proper role of the court of appeals is not to reweigh the equities or reassess the facts but to make sure that the conclusions derived from those weighings and assessments are juridically sound and supported by the record [italics added]. ..................................................... ... [T]he discretionary judgment of the district court should be given substantial deference, for that court is “the one most likely to be familiar with the case and with any justifiable reasons for delay.” .................................................................................................. Plainly, sound judicial administration does not require that Rule 54(b) requests be granted routinely. ... That is implicit in commending them to the sound discretion of a district court.

2 2 We do not suggest that the presence of one of these factors would necessarily mean that Rule 54(b) certification would be improper. It would, however, require the district court to find a sufficiently important reason for nonetheless granting certification. For example, if the district court concluded that there was a possibility that an appellate court would have to face the same issues on a subsequent appeal, this might perhaps be offset by a finding that an appellate resolution of the certified claims would facilitate a settlement of the remainder of the claims. See Cold Metal Process Co. v. United Engineering & Foundry Co [FRCP 54(b) was properly invoked where complaint stricken, leaving only counterclaim to be resolved].c c One should not lose too much sleep, trying to analyze when such claims are rationally separable from the other claims in the case.

Page 168 of 201

Because this discretion “is, with good reason, vested by the rule primarily” in the district courts, and because the number of possible situations is large, we are reluctant either to fix or sanction narrow guidelines for the district courts to follow. We are satisfied, however, that on the record here the District Court’s assessment of the equities was reasonable. .................................... One of the equities which the District Judge considered was the difference between the statutory and market rates of interest. Respondent correctly points out that adjustment of the statutory prejudgment interest rate is a matter within the province of the legislature, but that fact does not make the existing differential irrelevant for Rule 54(b) purposes. If the judgment is otherwise certifiable, the fact that a litigant who has successfully reduced his claim to judgment stands to lose money because of the difference in interest rates is surely not a “just reason for delay.” The difference between the prejudgment and market interest rates was not the only factor considered by the District Court. The court also noted that the debts in issue were liquidated and large, and that absent Rule 54(b) certification they [Curtis-Wright] would not be paid for “many months, if not years” because the rest of the litigation would be expected to continue for that period of time. The District Judge had noted ... [t]he only contest was over the effect of the ... the timing of the payment [on plaintiff’s complaint], an isolated and strictly legal issue on which summary judgment had been entered against respondent. ......................................................... The question before the District Court thus came down to which of the parties should get the benefit of the difference between the prejudgment and market rates of interest on debts admittedly owing and adjudged to be due while unrelated claims were litigated. The central factor weighing in favor of General Electric was that its pending counterclaims created the possibility of a setoff [$52 million] against the amount it owed petitioner [$19 million]. This possibility was surely not an insignificant factor, especially since the counterclaims had survived a motion to dismiss for failure to state a claim. But the District Court took this into account when it determined that both litigants appeared to be in financially sound condition, and that Curtiss-Wright would be able to satisfy a judgment on the counterclaims should any be entered...... . . . ....................................................................... The question in cases such as this is likely to be close, but the task of weighing and balancing the contending factors is peculiarly one for the trial judge, who can explore all the facets of a case. As we have noted, that assessment merits substantial deference on review. Here, the District Court’s assessment of the equities between the parties was based on an intimate knowledge of the case and is a reasonable one. The District Court having found no other reason justifying delay, we conclude that it did not abuse its discretion in granting petitioner’s motion for certification under Rule 54(b). ............................................................................................................................................................................... . . . ......................................................................... Accordingly, the judgment of the Court of Appeals is vacated, and the case is remanded for proceedings consistent with this opinion. ....................................................................... It is so ordered.

Notes and Questions:

Page 169 of 201

1. The issue in all of today’s cases is “appealability.” Unlike all cases you’ve read thus far, today’s assignment focuses on pre-final judgment “decisions” arguably too important to be denied immediate review. Keep in mind the pluses and minuses associated with the “wannabe” appellant, who effectively seeks to wage the war on two fronts: simultaneously at the trial and appellate levels.

2. What “equities” did the Curtiss court(s) assess, with a view toward determining appealability? Which one was dispositive?

3. The Supreme Court states: “we are reluctant either to fix or sanction narrow guidelines for the district courts to follow.” The established legislative policy, regarding pre- final judgment appeals, is to avoid piecemeal appeals. That policy seemingly militates against 54(b) and other pre-judgment bases for appeal. Does the quoted passage therefore suggest that the Supreme Court is doing its job—which is to provide guidance to the lower courts? What is the justification then, for the Supreme Court’s arguable hands-off policy regarding appellate intervention into trial court 54(b) decisions?

Page 170 of 201

MOHAWK INDUSTRIES, INC. v. CARPENTERUnited States Supreme Court

558 U.S. 100 (2009)

Justice Sotomayor delivered the [unanimous, with one concurring] opinion of the Court.

Section 1291 of the Judicial Code [generally] confers on federal courts of appeals jurisdiction to review “final decisions of the district courts.” Although “final decisions” typically are ones that trigger the entry of judgment, they also include a small set of prejudgment orders that are “collateral to” the merits of an action and “too important” to be denied immediate review. Cohen v. Beneficial Industrial Loan Corp. [i.e., appellate review authorized by a case]. In this case, petitioner Mohawk Industries, Inc., attempted to bring a collateral order appeal after the District Court ordered it to disclose certain confidential materials on the ground that Mohawk had waived the attorney-client privilege. The Court of Appeals dismissed the appeal for want of jurisdiction [prior to final judgment as to all issues].

The question before us is whether disclosure orders adverse to the attorney-client privilege qualify for immediate appeal under the collateral order doctrine. Agreeing with the Court of Appeals, we hold that they do not. Post-judgment appeals, together with other review mechanisms, suffice to protect the rights of litigants and preserve the vitality of the attorney-client privilege.

I

In 2007, respondent Norman Carpenter, a former shift supervisor at a Mohawk manufacturing facility, filed suit in the United States District Court for the Northern District of Georgia, alleging that Mohawk had terminated him in violation of 42 U.S.C. § 1985(2) and various Georgia laws. According to Carpenter’s complaint, his termination came after he informed a member of Mohawk’s human resources department in an e-mail that the company was employing undocumented immigrants. At the time, unbeknownst to Carpenter, Mohawk stood accused in a pending class-action lawsuit of conspiring to drive down the wages of its legal employees by knowingly hiring undocumented workers in violation of federal and state racketeering laws. Company officials directed Carpenter to meet with the company’s retained counsel in the Williams [class action] case, and counsel allegedly pressured Carpenter to recant his statements. When he refused, Carpenter alleges, Mohawk fired him under false pretenses.

... Mohawk described Carpenter’s accusations as “pure fantasy” and recounted the “true facts” of Carpenter’s dismissal. According to Mohawk, Carpenter himself had “engaged in blatant and illegal misconduct” by attempting to have Mohawk hire an undocumented worker. The company “commenced an immediate investigation,” during which retained counsel interviewed Carpenter. Because Carpenter’s “efforts to cause Mohawk to circumvent federal immigration law” “blatantly violated Mohawk policy,” the company terminated him.

Page 171 of 201

... Carpenter filed a motion to compel Mohawk to produce information concerning his meeting with retained counsel and the company’s termination decision. Mohawk maintained that the requested information was protected by the attorney-client privilege.

The District Court agreed that the privilege applied to the requested information, but it granted Carpenter’s motion to compel disclosure after concluding that Mohawk had implicitly waived the privilege through its representations in the [related class action] Williams case. The court declined to certify its order for interlocutory appeal under 28 U.S.C. § 1292(b).a But, recognizing “the seriousness of its [waiver] finding,” it stayed its ruling to allow Mohawk to explore other potential “avenues to appeal ..., such as ... appealing this Order under the collateral order doctrine.”

Mohawk filed a notice of appeal ... to the Eleventh Circuit. The Court of Appeals dismissed the appeal for lack of jurisdiction ..., holding that the District Court’s ruling did not qualify as an immediately appealable collateral order within the meaning of Cohen. “Under Cohen,” the Court of Appeals explained, “an order is appealable if it (1) conclusively determines the disputed question; (2) resolves an important issue completely separate from the merits of the action; and (3) is effectively unreviewable on appeal from a final judgment.” According to the [appellate] court, the District Court’s waiver ruling satisfied the first two of these requirements but not the third, because “a discovery order that implicates the attorney-client privilege” can be adequately reviewed “on appeal from a final judgment.” ... We granted certiorari, to resolve a conflict among the Circuits concerning the availability of collateral appeals in the attorney-client privilege context.

II

A

... Courts of Appeals “have jurisdiction of appeals from all final decisions of the district courts of the United States, ... except where a direct review may be had in the Supreme Court.” 28 U.S.C. § 1291. A “final decisio[n]” is typically one “by which a district court disassociates itself from a case.” This Court, however, “has long given” § 1291 a “practical rather than a technical construction.” As we held in Cohen, the statute encompasses not only judgments that “terminate an action,” but also a “small class” of collateral rulings that, although they do not end the litigation, are appropriately deemed “final.” “That small category includes only decisions that are conclusive, that resolve important questions separate from the merits, and that are effectively unreviewable on appeal from the final judgment in the underlying action” [italics added].

a a When a district judge ... shall be of the opinion that such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation, he shall so state in writing in such order. The Court of Appeals which would have jurisdiction of an appeal of such action may thereupon, in its discretion, permit an appeal to be taken from such order....

Page 172 of 201

In applying Cohen’s collateral order doctrine, we have stressed that it must “never be allowed to swallow the general rule that a party is entitled to a single appeal, to be deferred until final judgment has been entered”). Our admonition reflects a healthy respect for the virtues of the final-judgment rule. Permitting piecemeal, prejudgment appeals, we have recognized, undermines “efficient judicial administration” and encroaches upon the prerogatives of district court judges, who play a “special role” in managing ongoing litigation. (“[T]he district judge can better exercise [his or her] responsibility [to police the prejudgment tactics of litigants] if the appellate courts do not repeatedly intervene to second-guess prejudgment rulings”).

The justification for immediate appeal must therefore be sufficiently strong to overcome the usual benefits of deferring appeal until litigation concludes. This requirement finds expression in two of the three traditional Cohen conditions. The second condition insists upon “ important questions separate from the merits.” More significantly, “the third Cohen question, whether a right is ‘adequately vindicable’ or ‘effectively reviewable,’ simply cannot be answered without a judgment about the value of the interests that would be lost through rigorous application of a final judgment requirement.” That a ruling “may burden litigants in ways that are only imperfectly reparable by appellate reversal of a final district court judgment ... has never sufficed.” Instead, the decisive consideration is whether delaying review until the entry of final judgment “would imperil a substantial public interest” or “some particular value of a high order.”

... As long as the class of claims, taken as a whole, can be adequately vindicated by other means, “the chance that the litigation at hand might be speeded, or a ‘particular injustic[e]’ averted,” does not provide a basis for jurisdiction....

B

In the present case, the Court of Appeals concluded that the District Court’s privilege-waiver order satisfied the first two conditions of the collateral order doctrine—conclusiveness and separateness—but not the third—effective unreviewability. Because we agree with the Court of Appeals that collateral order appeals are not necessary to ensure effective review of orders adverse to the attorney-client privilege, we do not decide whether the other Cohen requirements are met.

Mohawk does not dispute that “we have generally denied review of pretrial discovery orders.” (“[T]he rule remains settled that most discovery rulings are not final.”) Mohawk contends, however, that rulings implicating the attorney-client privilege differ in kind from run-of-the-mill discovery orders because of the important institutional interests at stake. According to Mohawk, the right to maintain attorney-client confidences—the sine qua non of a meaningful attorney-client relationship—is “irreparably destroyed absent immediate appeal” of adverse privilege rulings.

. . .

Page 173 of 201

The crucial question, however, is not whether an interest is important in the abstract; it is whether deferring review until final judgment so imperils the interest as to justify the cost of allowing immediate appeal of the entire class of relevant orders. We routinely require litigants to wait until after final judgment to vindicate valuable rights, including rights central to our adversarial system. ([E.g.,] ... an order disqualifying counsel in a civil case did not qualify for immediate appeal under the collateral order doctrine); (reaching the same result in a criminal case, notwithstanding the Sixth Amendment rights at stake). ...

We reach a similar conclusion here. In our estimation, post-judgment appeals generally suffice to protect the rights of litigants and ensure the vitality of the attorney-client privilege. Appellate courts can remedy the improper disclosure of privileged material in the same way they remedy a host of other erroneous evidentiary rulings: by vacating an adverse judgment and remanding for a new trial in which the protected material and its fruits are excluded from evidence.

Dismissing such relief as inadequate, Mohawk emphasizes that the attorney-client privilege does not merely “prohibi[t] use of protected information at trial”; it provides a “right not to disclose the privileged information in the first place.” Mohawk is undoubtedly correct that an order to disclose privileged information intrudes on the confidentiality of attorney-client communications. But deferring review until final judgment does not meaningfully reduce the ... incentives for full and frank consultations between clients and counsel.

... . . . ......................................................................... Moreover, were attorneys and clients to reflect upon their appellate options, they would find that litigants confronted with a particularly injurious or novel privilege ruling have several potential avenues of review apart from collateral order appeal. First, a party may ask the district court to certify, and the court of appeals to accept, an interlocutory appeal pursuant to 28 U.S.C. § 1292(b).b The preconditions for § 1292(b) review—“a controlling question of law,” the prompt resolution of which “may materially advance the ultimate termination of the litigation”—are most likely to be satisfied when a privilege ruling involves a new legal question or is of special consequence, and district courts should not hesitate to certify an interlocutory appeal in such cases. Second, in extraordinary circumstances— i.e., when a disclosure order “amount[s] to a judicial usurpation of power or a clear abuse of discretion,” or otherwise works a manifest injustice—a party may petition the court of appeals for a writ of mandamus. Cheney v. United States Dist. Court. While these discretionary [as opposed to Cohen’s automatic] review mechanisms do not provide relief in every case, they serve as useful “safety valve[s]” for promptly correcting serious errors.

Another long-recognized option is for a party to defy a disclosure order and incur court-imposed sanctions. District courts have a range of sanctions from which to choose, including “directing that the matters embraced in the order or other designated facts be taken as established

b b See footnote a.

Page 174 of 201

for purposes of the action,” “prohibiting the disobedient party from supporting or opposing designated claims or defenses,” or “striking pleadings in whole or in part.” Fed. Rule Civ. Proc. 37(b)(2)(i)-(iii). Such sanctions allow a party to obtain post-judgment review without having to reveal its privileged information. Alternatively, when the circumstances warrant it, a district court may hold a non-complying party in contempt. The party can then appeal [automatically and] directly from that ruling, at least when the contempt citation can be characterized as a criminal punishment.

These established mechanisms for appellate review not only provide assurances to clients and counsel about the security of their confidential communications; they also go a long way toward addressing Mohawk’s concern that, absent collateral order appeals of adverse attorney-client privilege rulings, some litigants may experience severe hardship. Mohawk is no doubt right that an order to disclose privileged material may, in some situations, have implications beyond the case at hand. But the same can be said about many categories of pretrial discovery orders for which collateral order appeals are unavailable. As with these other orders, rulings adverse to the privilege vary in their significance; some may be momentous, but others are more mundane. Section 1292(b) appeals, mandamus, and appeals from contempt citations facilitate immediate [discretionary] review of some of the more consequential attorney-client privilege rulings. Moreover, [FRCP 26(c) discovery] protective orders are available to limit the spillover effects of disclosing sensitive information. That a fraction of orders adverse to the attorney-client privilege may nevertheless harm individual litigants in ways that are “only imperfectly reparable” does not justify making all such orders immediately appealable as of right....

... Permitting parties to undertake successive, piecemeal appeals of all adverse attorney-client rulings would unduly delay the resolution of district court litigation and needlessly burden the Courts of Appeals. (“Routine appeal from disputed discovery orders would disrupt the orderly progress of the litigation, swamp the courts of appeals, and substantially reduce the district court's ability to control the discovery process.”); (expressing concern that allowing immediate appeal as of right from orders fining attorneys for discovery violations would result in “the very sorts of piecemeal appeals and concomitant delays that the final judgment rule was designed to prevent”). ...4

. . .

In sum, we conclude that the collateral order doctrine does not extend to disclosure orders adverse to the attorney-client privilege. Effective appellate review can be had by other means. Accordingly, we affirm the judgment of the Court of Appeals for the Eleventh Circuit.

4 4 Participating as amicus curiae in support of respondent Carpenter, the United States contends that collateral order appeals should be available for rulings involving certain governmental privileges “in light of their structural constitutional grounding under the separation of powers, relatively rare invocation, and unique importance to governmental functions.” Brief for United States as Amicus Curiae [p.] 28. We express no view on that issue.

Page 175 of 201

It is so ordered.

Justice Thomas, concurring in part and concurring in the judgment.

. . .

“Finality as a condition of review is an historic characteristic of federal appellate procedure” that was incorporated in the first Judiciary Act and that Congress itself has “departed from only when observance of it would practically defeat the right to any review at all.” Until 1949 [Cohen], this Court’s view of the appellate jurisdiction statute [§1291] reflected this principle and the statute’s text. Cohen changed all that when it announced that a “small class” of collateral orders that do not meet the statutory definition of finality nonetheless may be immediately appealable if they satisfy certain criteria that show they are “too important to be denied review.”

... As we recognized last Term, however, our attempts to contain the Cohen doctrine have not all been successful or persuasive. See Ashcroft [v. Iqbal Day 11 pleading case] (“[A]s a general matter, the collateral-order doctrine may have expanded beyond the limits dictated by its internal logic and the strict application of the criteria set out in Cohen”).

. . .

Accordingly, I would leave the value judgments the Court makes in its opinion to the rulemaking process, and in so doing take this opportunity to limit—effectively, predictably, and in a way we should have done long ago—the doctrine that, with a sweep of the Court’s pen [in Cohen], subordinated what the appellate jurisdiction statute says to what the Court thinks is a good idea.

Notes and Questions:

1. See footnote a. What are the three elements for §1292(b) pre-judgment appeal? While they appear only in this alternative basis for such appeals, each one plays a role in all interlocutory—i.e., attempts to appeal prior to final judgment as to all issues and parties.

2. What are the elements for triggering the case-based collateral order doctrine—i.e., not derived from the all-encompassing basis for all appeals in the federal appellate-court system (28 USC §1291)?

3. Too much sleep can be lost over attempting to articulate the specific situations triggering collateral order appeal. One can surmise from Mohawk’s assessment, however, that the court has been very stingy in approving this form of appeal—in large part, because of its automatic appealability in cases where it does apply.

Page 176 of 201

4. Justice Thomas seemingly urges the Court to abandon Cohen. The Court has not done so. Thus, as about 100% of the orders in this course are not on the merits, once must acknowledge that such orders are presumably not appealable within the meaning of Cohen. 5. Justice Thomas refers to the primary pleading case we studied on Day 11 (Iqbal). The former heads of two major government agencies successfully appealed the qualified immunity from suit trial court decision, on the basis of the collateral order doctrine. Is immunity from suit in fact collateral to the merits? Or was their dismissal from the case based on the merits of the claims against them?

Page 177 of 201

CHENEY v. U.S. DISTRICT COURTUnited States Supreme Court

542 U.S. 367 (2004)

Justice Kennedy delivered the [fractious, multi-authored] opinion of the Court.

The United States District Court for the District of Columbia entered discovery orders directing the Vice President and other senior officials in the Executive Branch to produce information about a task force established to give advice and make policy recommendations to the President. This case requires us to consider the circumstances under which a court of appeals may exercise its power to issue a writ of mandamus to modify or dissolve the orders when, by virtue of their overbreadth, enforcement might interfere with the officials in the discharge of their duties and impinge upon the President’s constitutional prerogatives.

I

A few days after assuming office, President George W. Bush issued a memorandum establishing the National Energy Policy Development Group (NEPDG or Group). The Group was directed to “develo[p] ... a national energy policy designed to help the private sector, and government at all levels, promote dependable, affordable, and environmentally sound production and distribution of energy for the future.” The President assigned a number of agency heads and assistants—all employees of the Federal Government—to serve as members of the committee. He authorized the Vice President, as chairman of the Group, to invite “other officers of the Federal Government” to participate “as appropriate.” Five months later, the NEPDG issued a final report and, according to the Government, terminated all operations.

Following publication of the report, respondents Judicial Watch, Inc., and the Sierra Club filed these separate actions, which were later consolidated in the District Court. Respondents alleged the NEPDG had failed to comply with the procedural and disclosure requirements of the Federal Advisory Committee Act (FACA or Act).

FACA was enacted to monitor the “numerous committees, boards, commissions, councils, and similar groups [that] have been established to advise officers and agencies in the executive branch of the Federal Government,” § 2(a), and to prevent the “wasteful expenditure of public funds” that may result from their proliferation. Subject to specific exemptions, FACA imposes a variety of open-meeting and disclosure requirements on groups that meet the definition of an “advisory committee.” As relevant here, an “advisory committee” means

“any committee, board, commission, council, conference, panel, task force, or other similar group, or any subcommittee or other subgroup thereof ..., which is—

. . .

Page 178 of 201

“(B) established or utilized by the President, ...

except that [the definition] excludes (i) any committee that is composed wholly of full-time, or permanent part-time, officers or employees of the Federal Government ....”

Respondents do not dispute the President appointed only Federal Government officials to the NEPDG. They agree that the NEPDG, as established by the President in his memorandum, was “composed wholly of full-time, or permanent part-time, officers or employees of the Federal Government.” The complaint alleges, however, that “non-federal employees,” including “private lobbyists,” “regularly attended and fully participated in non-public meetings.” ... [R]espondents contend that the regular participation of the non-Government individuals made them de facto members of the committee. According to the complaint, their “involvement and role are functionally indistinguishable from those of the other [formal] members.” As a result, respondents argue, the NEPDG cannot benefit from the Act’s exemption under subsection B and is subject to FACA's requirements.

Vice President Cheney, the NEPDG, the Government officials who served on the committee, and the alleged de facto members were named as defendants. The suit seeks declaratory relief and an injunction requiring them to produce all materials allegedly subject to FACA’s requirements.

All defendants moved to dismiss. The District Court granted the motion in part and denied it in part. The court acknowledged FACA does not create a private cause of action. On this basis, it dismissed respondents’ claims against the non-Government defendants. Because the NEPDG had been dissolved, it could not be sued as a defendant; and the claims against it were dismissed as well. The District Court held, however, that FACA’s substantive requirements could be enforced against the Vice President and other Government participants on the NEPDG under the Mandamus Act, 28 U.S.C. § 1361, and against the agency defendants under the Administrative Procedure Act (APA). The District Court recognized the disclosure duty must be clear and nondiscretionary for mandamus to issue, and there must be, among other things, “final agency actions” for the APA to apply. According to the District Court, it was premature to decide these questions. It held only that respondents had alleged sufficient facts to keep the Vice President and the other defendants in the case.

The District Court deferred ruling on the Government’s contention that to disregard the exemption and apply FACA to the NEPDG would violate principles of separation of powers and interfere with the constitutional prerogatives of the President and the Vice President. ... While acknowledging that discovery itself might raise serious constitutional questions, the District Court explained that the Government could assert executive privilege to protect sensitive materials from disclosure. ...The District Court adopted this approach in an attempt to avoid constitutional questions, noting that if, after discovery, respondents have no evidentiary support

Page 179 of 201

for the allegations about the regular participation by lobbyists and industry executives on the NEPDG, the Government can prevail on statutory grounds. ... The court denied in part the motion to dismiss and ordered respondents to submit a discovery plan.

In due course the District Court ... denied the Government’s motion for certification under 28 U.S.C. § 1292(b) with respect to the discovery orders. Petitioners sought a writ of mandamus in the Court of Appeals to vacate the discovery orders, to direct the District Court to rule on the basis of the administrative record, and to dismiss the Vice President from the suit. The Vice President also filed a notice of appeal from the same orders. See Cohen v. Beneficial Industrial Loan Corp.[collateral order appeal].

A divided panel of the Court of Appeals dismissed the petition for a writ of mandamus....

For similar reasons, the majority rejected the Vice President’s [§1292(b)] interlocutory appeal. . . .

We granted certiorari. We now vacate the judgment of the Court of Appeals and remand the case for further proceedings to reconsider the Government’s mandamus petition.

. . .

III

We now come to the central issue in the case—whether the Court of Appeals was correct to conclude it “ha[d] no authority to exercise the extraordinary remedy of mandamus,” on the ground that the Government could protect its rights by asserting executive privilege in the District Court.

The common-law writ of mandamus against a lower court is codified at 28 U.S.C. § 1651(a): “The Supreme Court and all courts established by Act of Congress may issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law.” This is a “drastic and extraordinary” remedy “reserved for really extraordinary causes.” “The traditional use of the writ in aid of appellate jurisdiction both at common law and in the federal courts has been to confine [the court against which mandamus is sought] to a lawful exercise of its prescribed jurisdiction.” Although courts have not “confined themselves to an arbitrary and technical definition of ‘jurisdiction,’ ” “only exceptional circumstances amounting to a judicial ‘usurpation of power,’ ” or a “clear abuse of discretion,” “will justify the invocation of this extraordinary remedy.”

[T]hree conditions must be satisfied before it may issue. First, “the party seeking issuance of the writ [must] have no other adequate means to attain the relief he desires,”—a condition designed to ensure that the writ will not be used as a substitute for the regular appeals process. Second, the petitioner must satisfy “ ‘the burden of showing that [his] right to issuance of the writ is “clear and indisputable.” ’ “Third, even if the first two prerequisites have been met, the

Page 180 of 201

issuing court, in the exercise of its discretion, must be satisfied that the writ is appropriate under the circumstances. These hurdles, however demanding, are not insuperable. This Court has issued the writ to restrain a lower court when its actions would threaten the separation of powers by “embarrass[ing] the executive arm of the Government,” or result in the “intrusion by the federal judiciary on a delicate area of federal-state relations.”

Were the Vice President not a party in the case, the argument that the Court of Appeals should have entertained an action in mandamus, notwithstanding the District Court’s denial of the motion for certification, might present different considerations. Here, however, the Vice President and his co-members on the NEPDG are the subjects of the discovery orders. The mandamus petition alleges that the orders threaten “substantial intrusions on the process by which those in closest operational proximity to the President advise the President.” These facts and allegations remove this case from the category of ordinary discovery orders where interlocutory appellate review is unavailable, through mandamus or otherwise. It is well established that “a President’s communications and activities encompass a vastly wider range of sensitive material than would be true of any ‘ordinary individual.’ ” Rather, they simply acknowledge that the public interest requires that a co-equal branch of Government “afford Presidential confidentiality the greatest protection consistent with the fair administration of justice,” and give recognition to the paramount necessity of protecting the Executive Branch from vexatious litigation that might distract it from the energetic performance of its constitutional duties.

These separation-of-powers considerations should inform a court of appeals’ evaluation of a mandamus petition involving the President or the Vice President. Accepted mandamus standards are broad enough to allow a court of appeals to prevent a lower court from interfering with a co-equal branch’s ability to discharge its constitutional responsibilities.

IV

. . .

The Court also observed in Nixon that a “primary constitutional duty of the Judicial Branch [is] to do justice in criminal prosecutions.” Withholding materials from a tribunal in an ongoing criminal case when the information is necessary to the court in carrying out its tasks “conflict[s] with the function of the courts under Art. III.” Such an impairment of the “essential functions of [another] branch,” is impermissible. Withholding the information in this case, however, does not hamper another branch’s ability to perform its “essential functions” in quite the same way. The District Court ordered discovery here, not to remedy known statutory violations, but to ascertain whether FACA’s disclosure requirements even apply to the NEPDG in the first place. ... The situation here cannot, in fairness, be compared to Nixon, where a court’s ability to fulfill its constitutional responsibility to resolve cases and controversies within its jurisdiction hinges on the availability of certain indispensable information.

Page 181 of 201

A party’s need for information is only one facet of the problem. An important factor weighing in the opposite direction is the burden imposed by the discovery orders. This is not a routine discovery dispute. The discovery requests are directed to the Vice President and other senior Government officials who served on the NEPDG to give advice and make recommendations to the President. The Executive Branch, at its highest level, is seeking the aid of the courts to protect its constitutional prerogatives.

. . .[T]he discovery requests here, as the panel majority acknowledged, ask for everything under the sky. . . .

The Government ... object[ed] to the scope of discovery and asked the District Court to narrow it in some way. Its arguments were ignored. ................................................................ . . .

Once executive privilege is asserted, co-equal branches of the Government are set on a collision course. The Judiciary is forced into the difficult task of balancing the need for information in a judicial proceeding and the Executive’s Article II prerogatives. This inquiry places courts in the awkward position of evaluating the Executive’s claims of confidentiality and autonomy, and pushes to the fore difficult questions of separation of powers and checks and balances. These “occasion[s] for constitutional confrontation between the two branches” should be avoided whenever possible.

. . .

[U]nder principles of mandamus jurisdiction, the Court of Appeals may exercise its power to issue the writ only upon a finding of “exceptional circumstances amounting to a judicial ‘usurpation of power,’ ” or a “clear abuse of discretion.” As this case implicates the separation of powers, the Court of Appeals must also ask, as part of this inquiry, whether the District Court’s actions constituted an unwarranted impairment of another branch in the performance of its constitutional duties. ...

V

In the absence of overriding concerns of the sort discussed in Schlagenhauf [Day 17 discovery case], (discussing ... the need to avoid “piecemeal litigation” and to settle important issues of first impression in areas where this Court bears special responsibility), we decline petitioners’ invitation to direct the Court of Appeals to issue the writ against the District Court. Moreover, this is not a case where, after having considered the issues, the Court of Appeals abused its discretion by failing to issue the writ. Instead, the Court of Appeals ... prematurely terminated its inquiry after the Government refused to assert privilege and did so without even reaching the weighty separation-of-powers objections raised in the case, much less exercised its

Page 182 of 201

discretion to determine whether “the writ is appropriate under the circumstances.” ... [W]e leave to the Court of Appeals to address the parties’ arguments with respect to the challenge to AAPS and the discovery orders. Other matters bearing on whether the writ of mandamus should issue should also be addressed, in the first instance, by the Court of Appeals after considering any additional briefs and arguments as it deems appropriate. We note only that all courts should be mindful of the burdens imposed on the Executive Branch in any future proceedings. Special considerations applicable to the President and the Vice President suggest that the courts should be sensitive to requests by the Government for interlocutory appeals....

The judgment of the Court of Appeals for the District of Columbia is vacated, and the case is remanded for further proceedings consistent with this opinion.

It is so ordered.

. . .

Justice Thomas, with whom Justice Scalia joins, concurring in part and dissenting in part.

I agree that “[t]he remedy of mandamus is a drastic one, to be invoked only in extraordinary situations.” .......................................................................................................... . . .

One need look no further than the District Court's opinion to conclude respondents’ right to relief in the District Court was unclear and hence that mandamus would be unavailable.

Justice Ginsburg, with whom Justice Souter joins, dissenting.

The Government, in seeking a writ of mandamus from the Court of Appeals for the District of Columbia, and on brief to this Court, urged that this case should be resolved without any discovery. ... But, as the Court of Appeals observed, it appeared that the Government “never asked the district court to narrow discovery.” Given the Government’s decision to resist all discovery, mandamus relief based on the exorbitance of the discovery orders is at least “premature.” I would therefore affirm the judgment of the Court of Appeals denying the writ,

and allow the District Court ... to pursue its expressed intention “tightly [to] rei[n][in] discovery,” should the Government so request.

I

. . .

B

Denied § 1292(b) [joint discretion] certification by the District Court, the Government sought a writ of mandamus from the Court of Appeals.

Page 183 of 201

. . .

II

“This Court repeatedly has observed that the writ of mandamus is an extraordinary remedy, to be reserved for extraordinary situations.” As the Court reiterates, “the party seeking issuance of the writ [must] have no other adequate means to attain the relief he desires.”

Throughout this litigation, the Government has declined to move for reduction of the District Court’s discovery order to accommodate separation-of-powers concerns. ... Nothing in the District Court’s orders or the Court of Appeals’ opinion, however, suggests that either of those courts would refuse reasonably to accommodate separation-of-powers concerns. When parties seeking a mandamus writ decline to avail themselves of opportunities to obtain relief from the District Court, a writ of mandamus ordering the same relief—i.e., here, reined-in discovery—is surely a doubtful proposition. ................................................................................... . . .

The District Court, moreover, did not err in failing to narrow discovery on its own initiative. ... A district court is not subject to criticism if it awaits a party’s motion before tightening the scope of discovery; certainly, that court makes no “clear and indisputable” error in adhering to the principle of party initiation.

Notes and Questions:

1. You’ve now reviewed the prominent bases for procuring pre-judgment appellate review—via the FRCP (dismissal of less than all claims), case law (Cohen collateral orders, as applied in Mohawk), and by statute (§1292b joint discretion and §1651a writ jurisdiction), as applied in Mohawk and Cheney respectively. Each has its supposed elements and factors. However, predicting success in the federal appellate courts is comparatively difficult. In a number of states, for example, there is a relatively closed statutory list of bases for appeal prior to judgment. All non-listed appellate review is sought via the writ route. See, e.g., Cal. Code Civ. Proc. § 904.1 .

2. When presented with the issue of whether an order is appealable, one should first be certain to focus on the particular order. With that detail in hand, then distinguish whether the order is on the merits, or collateral to the merits. One may then proceed to apply the two statutory bases for seeking pre-final judgment appellate review.

Page 184 of 201

RUSH v. CITY OF MAPLE HEIGHTS Supreme Court of Ohio

147 N.E.2d 599 (1958)

Herbert, Judge [delivered the 6-1 opinion of the court].

The eighth error assigned by the defendant is that ‘the trial and appellate courts committed error in permitting plaintiff to split her cause of action and to file a separate action ... for her property damage and reduce same to judgment, and, thereafter, to proceed ... with a separate action for personal injuries, both claims arising out of a single accident.’

. . .

In the case of Vasu v. Kohlers, Inc., 61 N.E.2d 707 [1945], ... [the Ohio Supreme Court summarized the early common law view regarding res judicata]:

‘1. If the owner of a single cause of action arising out of a single tortious act brings an action against his tort-feasor, he may have but one recovery; and, in case he fails to recover, he may not maintain a subsequent action on the same cause of action, even though he has failed to include his entire cause of action or elements of damage in his original action.

‘2. If an owner of a single cause of action has a recovery thereon, the cause of action is merged in the judgment; but if he fails to recover on his claimed cause of action and judgment goes against him, such judgment is res judicata and a bar to a second action on the same cause of action.

‘ . . .

‘4. Injuries to both person and property suffered by the same person as a result of the same wrongful act are infringements of different rights and give rise to distinct causes of action, with the result that the recovery or denial of recovery of compensation for damages to the property is no bar to an action subsequently prosecuted for the personal injury ... [italics added].

. . .

The foregoing syllabus is set forth ... for subsequent reference herein. The first two paragraphs, although not pertinent there [in Vasu] because of the fourth paragraph, are not only applicable but persuasive in our determination here.

. . .

Page 185 of 201

‘ ... [W]here the same person sustains injury to both his property and his person as a result of the same incident ... an infringement of different rights occurs, so that he has two causes of action—one for damage to his property and the other for injury to his person; that, hence, where he prosecutes those causes of action separately, a verdict and judgment against him in one case do not preclude him from litigating the other, and his success in the other case is not prevented by an adverse result in the first; and that in such a situation res judicata ... may not be invoked by his opponent’ [in the second suit on that incident].

. . .

However, it is contended here [in Rush] that that rule is in conflict with the great weight of authority in this country and has caused vexatious litigation. The following quotation from 1 American Jurisprudence, 494, Section 114, states this question well:

‘It sometimes happens that a single wrongful or negligent act causes damage in respect of both the person and the property of the same individual, as, for instance, where the owner of a vehicle is injured in a collision which also damages the vehicle. In such a case, the question arises as to whether there are two causes of action or only one, and the authorities are in conflict concerning it. The majority rule is that only one cause of action arises, the reason of the rule being that as the defendant’s wrongful act is single, the cause of action must be single, and that the different injuries occasioned by it are merely items of damage proceeding from the same wrong. ...

‘In other jurisdictions, the rule is that two causes of action result from a negligent act which inflicts injury on a person and his property at the same time. This conclusion has been reached in different jurisdictions by different lines of reasoning.’

. . .

The reasoning behind the majority rule seems to be well stated ... as follows:

‘The negligent action of the plaintiff in error [defendant] constituted but one tort. The injuries to the person and property of the defendant in error [plaintiff] were the several results and effects of one wrongful act. A single tort can be the basis of but one action. It is not improper to declare in different counts for damages to the person and property when both result from the same tort, and it is the better practice to do so where there is any difference in the measure of damages, and all the damages sustained must be

Page 186 of 201

sued for in one suit. This is necessary to prevent multiplicity of suits, burdensome expense, and delays to plaintiffs, and vexatious litigation against defendants. ...

‘Indeed, if the plaintiff fail[s] to sue for the entire damage done him by the tort, a second action for the damages omitted will be precluded by the judgment in the first suit brought and tried.’

The minority rule would seem to stem from the English case[s] ... :

‘The ... test is ... in the action relating to the cab, it would be necessary to give evidence of the damage done to the plaintiff’s vehicle. In the present [subsequent] action it would be necessary to give evidence of the bodily injury occasioned to the plaintiff, and of the sufferings which he has undergone, and for this purpose to call medical witnesses. ... [T]he causes of action as to the damage done to the plaintiff’s cab, and as to the injury occasioned to the plaintiff’s person, are distinct.’

The fallacy of the reasoning in the English court is best portrayed in the dissenting opinion of Lord Coleridge, as follows:

‘It appears to me that whether the negligence of the servant, or the impact of the vehicle which the servant drove, be the technical cause of action, equally the cause is one and the same: that the injury done to the plaintiff is injury done to him at one and the same moment by one and the same act in respect of different rights, i. e. his person and his goods, I do not in the least deny; but it seems to me a subtlety not warranted by law to hold that a man cannot bring two actions, if he is injured in his arm and in his leg, but can bring two, if besides his arm and leg being injured, his trousers which contain his leg, and his coatsleeve which contains his arm, have been torn.’

There appears to be no valid reason in these days of [modern] code pleading to adhere to the old English rule as to distinctions between injuries to the person and damages to the person’s property resulting from a single tort. It would seem that the minority rule is bottomed on the proposition that the right of bodily security is fundamentally different from the right of security of property and, also, that, in actions predicated upon a negligent act, damages are a necessary element of each independent cause of action and no recovery may be had unless and until actual consequential damages are shown.

Page 187 of 201

Whether or not injuries to both person and property resulting from the same wrongful act are to be treated as injuries to separate rights or as separate items of damage, ... the answer [is] that a plaintiff may maintain only one action to enforce his rights existing at the time such action is commenced.

. . .

Apparently, much of the vexatious litigation, with its attendant confusion, which has resulted in recent years from the filing of separate petitions by the same plaintiff, one for personal injuries and one for property damage although sustained simultaneously, has grown from that one decision [Vasu], this case presenting a good example.

In the light of the foregoing, it is the view of this court that the so-called majority rule conforms much more properly to modern practice, and that the rule declared in the fourth paragraph of the syllabus in the Vasu case ... should not be followed.

We, therefore ... hold that, where a person suffers both personal injuries and property damage as a result of the same wrongful act, only a single cause of action arises, the different injuries occasioned thereby being separate items of damage from such act. It follows that paragraph four of the syllabus in the Vasu case must be overruled.

. . .

Accordingly, the judgment of the Court of Appeals is reversed, and final judgment is entered for defendant.

Judgment reversed and final judgment for defendant.

Notes and Questions: ........................................................ 1. Ohio’s previous Vasu case held that Mrs. Rush would have two causes of action. Rush later held that she had one use of action (barring her from suing a second time on the same accident). Can you articulate the difference between the majority and minority positions on res judicata? One can focus on the plaintiff, or the defendant, when articulating this difference. As a result of Rush, What is the judicial unit, for purposes of res judicata?

2. What would be a practical reason for the Rush court’s shift to the majority res judicata rule?

3. As a matter of stare decisis, judicial decisions generally operate retroactively. Courts will sometimes apply a prospective rule, to minimize prejudice to the existing parties. The Rush court did not do that. Its members may have felt that Ohio’s lower court decisions signaled this shift, in a way which put the plaintiff on notice of the potential change.

Page 188 of 201

MATHEWS v. NEW YORK RACING ASS’NUnited States District Court, Southern District of New York

193 F.Supp. 293 (1961)

MacMmahon, District Judge.

Defendants move for summary judgment ... on the ground that a judgment in a prior action in this court is res judicata as to the claim alleged in the complaint.

New York Racing Association Inc. is a New York corporation which operates Jamaica Race Track. It employs defendant Thoroughbred Racing Protective Association Inc., a private detective agency, for security purposes.

Plaintiff brings this action against the Association and Thoroughbred alleging that ... at Jamaica Race Track, he was ‘assaulted,’ ‘kidnaped,’ ‘falsely arrested,’ and ‘falsely imprisoned’ by employees of Thoroughbred. ... He prays for relief in the form of money damages and an injunction restraining the defendants from interfering with his attendance at race tracks, from publication of libelous statements, and from acting as peace officers.

The prior judgment on which defendants rely was entered in this court ... following a trial before Judge Palmieri sitting without a jury. The complaint in that action alleged, among other matters, that plaintiff was assaulted by the defendant’s private investigators at Jamaica Race Track. ... The relief prayed for in that action was also money damages and an injunction from further interference with plaintiff’s attendance at race tracks within the United States. The earlier action named three individuals as defendants. The only two properly served were employees of the defendants named in the present suit.

The doctrine of res judicata operates as a bar to subsequent suits involving the same parties, or those in privity with them, based on a claim which has once reached a judgment on the merits. There can be no doubt that the parties in this action are in privity with those in the earlier suit. A corporation acts only through its agents, and if the agents are not at fault, there is no basis for corporate liability. This, of course, is nothing more than the application of familiar principles of the law of agency.

The Association owns the race track, Thoroughbred is its agent, and the individual defendants, who removed plaintiff from Jamaica Race Track ... and who testified at his trial ... were employees of Thoroughbred. The present corporate defendants are, therefore, so identified in interest with their agents, the individual defendants in the earlier action, that they stand or fall with them.

Page 189 of 201

The classic situation in which the doctrine of res judicata comes into play is where a second claim between the same parties is based on the same operative facts as the earlier one. The issues tried in the first claim and any other issues which could have been dealt with there are forever barred by the first judgment.

Thus, the question is whether the claim alleged in this complaint is the same as that in the suit concluded earlier. The term ‘claim’ refers to a group of facts limited to a single occurrence or transaction without particular reference to the resulting legal rights. It is the facts surrounding the occurrence which operate to make up the claim, not the legal theory upon which a plaintiff relies.

The facts upon which plaintiff predicates this action ... are so interrelated as to constitute a single claim. ...

The facts relevant to the incident at Jamaica Race Track ... were tried to a conclusion in the earlier suit. There, the plaintiff relied on the acts of the agents occurring ... as the basis of a claim against them on the theory of assault. Now, he asserts these same acts as the basis of a claim against the agents’ principals on the theory of false arrest. In the earlier action, plaintiff relied on the statements of the agents ... as the basis of a claim against them on the theory of libel. Now, he asserts those same statements as the basis of a claim against their principals on the theory of malicious prosecution. Clearly, any liability of the defendants for the acts or statements of their agents must be predicated upon the familiar principle of respondeat superior. Thus, if the agents committed no actionable wrong against the plaintiff, neither did their principals.

Essentially, therefore, the same facts are the basis for liability in each suit. The testimony of the witnesses who took part in or saw the ejection of the plaintiff ... is the same under any theory of liability. The evidence that agents of the defendants characterized plaintiff as undesirable is the same in each suit, whether plaintiff claims the words the agents used are actionable under a theory of libel or under a theory of malicious prosecution.

The plaintiff cannot be permitted to splinter his claim into a multiplicity of suits and try them piecemeal at his convenience. ‘The plaintiff having alleged operative facts which state a cause of action because he tells of defendant’s misconduct and his own harm has had his day in court. He does not get another day after the first lawsuit is concluded by giving a different reason than he gave in the first for recovery of damages for the same invasion of his rights. The problem of his rights against the defendant based upon the alleged wrongful acts is fully before the court whether all the reasons for recovery were stated to the court or not.’

The issues relating to plaintiff’s ejection from Jamaica Race Track ... and his [ensuing criminal trial] ...were tried and determined by Judge Palmieri, who found that upon the facts and law plaintiff had shown no right to relief. He specifically found that plaintiff had physically resisted removal from the track, and that the defendants’ employees had used no more force than was reasonably necessary to effect his removal. ...

Page 190 of 201

The court is cognizant of the fact that plaintiff appears pro se, but as the law provides a beginning for litigation, it must also provide an end. The doctrine of res judicata is a barrier against needless multiplication of litigation. ‘Litigation is the means for vindicating rights, but it may also involve unwarranted friction and waste. The doctrine ... reflects the refusal of law to tolerate needless litigation. Litigation is needless if, by fair process, a controversy has once gone through the courts to conclusion.’

Plaintiff had the opportunity to consolidate this action with the earlier one, which he was told arose out of the same claim. ... He failed to accept either that suggestion in this action or judicial advice that he retain an attorney in a third action growing out of the same facts [which included a criminal proceeding].

Plaintiff has had his day in court. The doctrine of res judicata must now take effect, putting an end to this litigation. Accordingly, defendants’ motion is granted.

So ordered.

Notes and Questions:

1. The court notes that the “classic situation in which the doctrine of res judicata comes into play is where a second claim between the same parties is based on the same operative facts as the earlier one.” While the plaintiff in both suits is the same, the defendants are not—the individual employees in suit one (alleging the torts of assault and libel), and the employers in suit two (alleging the torts of false arrest and malicious prosecution). Why does the court nevertheless characterize this case as one which validly triggers a res judicata defense? What theory or theories support this assessment?

2. Earlier in this course, we learned that the plaintiff is supposedly the master of his suit. He may sue whomever he wishes, and is not required to join all potential defendants. The Matthews court is effectively saying this plaintiff should have joined the employees and the employers in the first suit. Which theme makes the most sense on these facts? Is the latter more practical?

Page 191 of 201

BERNHARD v. BANK OF AMERICA NAT’L TRUST & SAVINGS ASS’NCalifornia Supreme Court

19 Cal.2d 807 (1942)

Traynor, Justice [delivered the unanimous opinion of the court].

In June, 1933, Mrs. Clara Sather, an elderly woman, made her home with Mr. and Mrs. Charles O. Cook in San Dimas, California. Because of her failing health, she authorized Mr. Cook and Dr. Joseph Zeiler to make drafts jointly against her commercial account in the Security First National Bank of Los Angeles. ... Mr. Cook opened a commercial account at the First National Bank of San Dimas in the name of “Clara Sather by Charles O. Cook.” No authorization for this account was ever given to the bank by Mrs. Sather. Thereafter, a number of checks drawn by Cook and Zeiler on Mrs. Sather’s commercial account in Los Angeles were deposited in the San Dimas account and checks were drawn upon that account signed “Clara Sather by Charles O. Cook” to meet various expenses of Mrs. Sather.

On October 26, 1933, a teller from the Los Angeles Bank called on Mrs. Sather at her request to assist in transferring her money from the Los Angeles Bank to the San Dimas Bank. In the presence of this teller, the cashier of the San Dimas Bank, Mr. Cook, and her physician, Mrs. Sather signed by mark an authorization directing the Security First National Bank of Los Angeles to transfer the balance of her savings account in the amount of $4,155.68 to the First National Bank of San Dimas. She also signed an order for this amount on the Security First National Bank of San Dimas “for credit to the account of Mrs. Clara Sather.” The order was credited by the San Dimas Bank to the account of “Clara Sather by Charles O. Cook.” Cook withdrew the entire balance from that account and opened a new account in the same bank in the name of himself and his wife. He subsequently withdrew the funds from this last mentioned account and deposited them in a Los Angeles Bank in the names of himself and his wife.

Mrs. Sather died in November, 1933. Cook qualified as executor of the estate and proceeded with its administration. After a lapse of several years he filed an account at the instance of the probate court accompanied by his resignation. The account made no mention of the money transferred by Mrs. Sather to the San Dimas Bank; and Helen Bernhard, Beaulah Bernhard, Hester Burton, and Iva LeDoux, beneficiaries under Mrs. Sather's will, filed objections to the account for this reason. After a hearing on the objections the court settled the account, and as part of its order declared that the decedent during her lifetime had made a gift to Charles O. Cook of the amount of the deposit in question.

After Cook’s discharge, Helen Bernhard was appointed administratrix with the will annexed. She instituted this action against defendant, the Bank of America, successor to the San Dimas Bank, seeking to recover the deposit on the ground that the bank was indebted to the

Page 192 of 201

estate for this amount because Mrs. Sather never authorized its withdrawal. In addition to a general denial, defendant pleaded two affirmative defenses: (1) that the money on deposit was paid out to Charles O. Cook with the consent of Mrs. Sather and (2) that this fact is res judicata by virtue of the finding of the probate court in the proceeding to settle Cook’s account that Mrs. Sather made a gift of the money in question to Charles O. Cook and “owned no sums of money whatsoever” at the time of her death. Plaintiff demurred to both these defenses, and objected to the introduction in evidence of the record of the earlier proceeding to support the plea of res judicata.a ... The trial court overruled the demurrers and objection to the evidence, and gave judgment for defendant on the ground that Cook’s ownership of the money was conclusively established by the finding of the probate court. Plaintiff has appealed, denying that the doctrine of res judicata is applicable to the instant case or that there was a valid gift of the money to Cook by Mrs. Sather.

Plaintiff contends that the doctrine of res judicata does not apply because the defendant who is asserting the plea was not a party to the previous action nor in privity with a party to that action and because there is no mutuality of estoppel.

The doctrine of res judicata precludes parties or their privies from relitigating a cause of action that has been finally determined by a court of competent jurisdiction [italics added]. Any issue necessarily decided in such litigation is conclusively determined as to the parties or their privies if it is involved in a subsequent lawsuit on a different cause of action [italics added]. The rule is based upon the sound public policy of limiting litigation by preventing a party who has had one fair trial on an issue from again drawing it into controversy. The doctrine also serves to protect persons from being twice vexed for the same cause. It must, however, conform to the mandate of due process of law that no person be deprived of personal or property rights by a judgment without notice and an opportunity to be heard.

Many courts have stated the facile formula that the plea of res judicata is available only when there is privity and mutuality of estoppel. Under the requirement of privity, only parties to the former judgment or their privies may take advantage of or be bound by it. A party in this connection is one who is “directly interested in the subject matter, and had a right to make defense, or to control the proceeding, and to appeal from the judgment.” A privy is one who, after rendition of the judgment, has acquired an interest in the subject matter affected by the judgment through or under one of the parties, as by inheritance, succession, or purchase.The estoppel is mutual if the one taking advantage of the earlier adjudication would have been bound by it, had it gone against him.

a a Courts, especially in older cases, use the term “res judicata” to embrace both the affirmative defenses of res judicata and collateral estoppel. The federal rules-makers unwittingly failed to add collateral estoppels to FRCP 8(c), in a non-substantive edit designed to provide clarity to the rules. You do not have the luxury of following in their footsteps. You must be able to distinguish between res judicata and collateral estoppel situations—in this class, on the bar examination, and in practice.

Page 193 of 201

The criteria for determining who may assert a plea of res judicata differ[s] fundamentally from the criteria for determining against whom a plea of res judicata may be asserted. The requirements of due process of law forbid the assertion of a plea of res judicata against a party unless he was bound by the earlier litigation in which the matter was decided. He is bound by that litigation only if he has been a party thereto or in privity with a party thereto. There is no compelling reason, however, for requiring that the party asserting the plea of res judicata must have been a party, or in privity with a party, to the earlier litigation.

No satisfactory rationalization has been advanced for the requirement of mutuality. Just why a party who was not bound by a previous action should be precluded from asserting it as res judicata against a party who was bound by it is difficult to comprehend. Many courts have abandoned the requirement of mutuality and confined the requirement of privity to the party against whom the plea of res judicata is asserted. The commentators are almost unanimously in accord. The courts of most jurisdictions have in effect accomplished the same result by recognizing a broad exception to the requirements of mutuality and privity, namely, that they are not necessary where the liability of the defendant asserting the plea of res judicata is dependent upon or derived from the liability of one who was exonerated in an earlier suit brought by the same plaintiff upon the same facts.

Typical examples of such derivative liability are master and servant, principal and agent, and indemnitor and indemnitee. Thus, if a plaintiff sues a servant for injuries caused by the servant’s alleged negligence within the scope of his employment, a judgment against the plaintiff on the grounds that the servant was not negligent can be pleaded by the master as res judicata if he is subsequently sued by the same plaintiff for the same injuries. Conversely, if the plaintiff first sues the master, a judgment against the plaintiff on the grounds that the servant was not negligent can be pleaded by the servant as res judicata if he is subsequently sued by the plaintiff.b In each of these situations the party asserting the plea of res judicata was not a party to the previous action nor in privity with such a party under the accepted definition of a privy set forth above. Likewise, the estoppel is not mutual since the party asserting the plea, not having been a party or in privity with a party to the former action, would not have been bound by it had it been decided the other way. The cases justify this exception on the ground that it would be unjust to permit one who has had his day in court to reopen identical issues by merely switching adversaries [italics added].

In determining the validity of a plea of res judicata three questions are pertinent: Was the issue decided in the prior adjudication identical with the one presented in the action in question? Was there a final judgment on the merits? Was the party against whom the plea is asserted a party or in privity with a party to the prior adjudication? ...

In the present case, therefore, the defendant is not precluded by lack of privity or of mutuality of estoppel from asserting the plea of res judicata against the plaintiff. Since the issue

b b One hopes that this scenario has an incredibly familiar ring to it.

Page 194 of 201

as to the ownership of the money is identical with the issue raised in the probate proceeding, and since the order of the probate court settling the executor’s account was a final adjudication of this issue on the merits, it remains only to determine whether the plaintiff in the present action was a party or in privity with a party to the earlier proceeding. The plaintiff has brought the present action in the capacity of administratrix of the estate. In this capacity she represents the very same persons and interests that were represented in the earlier hearing on the executor’s account. In that proceeding plaintiff and the other legatees who objected to the executor’s account represented the estate of the decedent. They were seeking not a personal recovery but, like the plaintiff in the present action, as administratrix, a recovery for the benefit of the legatees and creditors of the estate, all of whom were bound by the order settling the account. The plea of res judicata is therefore available against plaintiff as a party to the former proceeding, despite her formal change of capacity. “Where a party though appearing in two suits in different capacities is in fact litigating the same right, the judgment in one estops him in the other.”

The judgment is affirmed.

Notes and Questions:

1. The Bernhard court uses the term res judicata throughout the case. Why is this not a res judicata situation? Why is it a collateral estoppel situation?

2. What is the material fact-central issue in this case? How was it resolved?

3. What is mutuality of estoppel? Why was it discarded? What rule that took its place?

4. What are the collateral estoppel elements?

Page 195 of 201

PARKLANE HOSIERY CO., INC. v. SHOREUnited States Supreme Court

439 U.S. 322 (1979)

Mr. Justice Stewart delivered the [6-1] opinion of the Court.

This case presents the question whether a party who has had issues of fact adjudicated adversely to it in an equitable action may be collaterally estopped from relitigating the same issues before a jury in a subsequent legal action brought against it by a new party.

The respondent brought this stockholder’s class action against the petitioners in a Federal District Court. The complaint alleged that the petitioners, Parklane Hosiery Co., Inc. (Parklane), and 13 of its officers, directors, and stockholders, had issued a materially false and misleading proxy statement in connection with a merger.1 The proxy statement, according to the complaint, had violated ... the Securities Exchange Act of 1934, as well as various rules and regulations promulgated by the Securities and Exchange Commission (SEC). The complaint sought damages, rescission of the merger, and recovery of costs.

Before this action came to trial, the SEC filed suit against the same defendants in the Federal District Court, alleging that the proxy statement that had been issued by Parklane was materially false and misleading in essentially the same respects as those that had been alleged in the respondent’s complaint. Injunctive relief was requested. After a 4-day trial [of the SEC action], the District Court found that the proxy statement was materially false and misleading in the respects alleged, and entered a declaratory judgment to that effect. The Court of Appeals for the Second Circuit affirmed this judgment.

The respondent [Shore] in the present case then moved for partial summary judgment against the petitioners, asserting that the petitioners were collaterally estopped from relitigating the issues that had been resolved against them in the action brought by the SEC. The District Court denied the motion on the ground that such an application of collateral estoppel would deny the petitioners their Seventh Amendment right to a jury trial. The Court of Appeals for the Second Circuit reversed, holding that a party who has had issues of fact determined against him [it] after a full and fair opportunity to litigate in a nonjury trial is collaterally estopped from obtaining a subsequent jury trial of these same issues of fact. The appellate court concluded that “the Seventh Amendment preserves the right to jury trial only with respect to issues of fact, [and]

1 1 The amended complaint alleged that the proxy statement that had been issued to the stockholders was false and misleading because it failed to disclose: (1) that the president of Parklane would financially benefit as a result of the company's going private; (2) certain ongoing negotiations that could have resulted in financial benefit to Parklane; and (3) that the appraisal of the fair value of Parklane stock was based on insufficient information to be accurate.

Page 196 of 201

once those issues have been fully and fairly adjudicated in a prior proceeding, nothing remains for trial, either with or without a jury.” Because of an inter-circuit conflict, we granted certiorari.

I

The threshold question to be considered is whether ... the petitioners can be precluded from relitigating facts resolved adversely to them in a prior equitable proceeding with another party under the general law of collateral estoppel. Specifically, we must determine whether a litigant who was not a party to a prior judgment may nevertheless use that judgment “offensively” to prevent a defendant from relitigating issues resolved in the earlier proceeding.4

A

Collateral estoppel, like the related doctrine of res judicata,5 has the dual purpose of protecting litigants from the burden of relitigating an identical issue with the same party or his privy and of promoting judicial economy by preventing needless litigation. Until relatively recently, however, the scope of collateral estoppel was limited by the doctrine of mutuality of parties. Under this mutuality doctrine, neither party could use a prior judgment as an estoppel against the other unless both parties were bound by the judgment.a Based on the premise that it is somehow unfair to allow a party to use a prior judgment when he himself would not be so bound,7 the mutuality requirement provided a party who had litigated and lost in a previous action an opportunity to relitigate identical issues with new parties.

By failing to recognize the obvious difference in position between a party who has never litigated an issue and one who has fully litigated and lost, the mutuality requirement was criticized almost from its inception.8 Recognizing the validity of this criticism, the [US Supreme] Court ... abandoned the mutuality requirement, at least in cases where a patentee seeks to relitigate the validity of a patent after a federal court in a previous lawsuit has already declared it invalid. The “broader question” before the Court, however, was “whether it is any longer tenable

4 4 In this context, offensive use of collateral estoppel occurs when the plaintiff seeks to foreclose the defendant from litigating an issue the defendant has previously litigated unsuccessfully in an action with another party. Defensive use occurs when a defendant seeks to prevent a plaintiff from asserting a claim the plaintiff has previously litigated and lost against another defendant.5 5 Under the doctrine of res judicata, a judgment on the merits in a prior suit bars a second suit involving the same parties or their privies based on the same cause of action. Under the doctrine of collateral estoppel, on the other hand, the second action is upon a different cause of action and the judgment in the prior suit precludes relitigation of issues actually litigated and necessary to the outcome of the first action.a a The federal courts abandoned the common law mutuality of estoppels requirement, after California did so in Bernhard. 7 7 It is a violation of due process for a judgment to be binding on a litigant who was not a party or a privy and therefore has never had an opportunity to be heard.8 8 ... The opinion of Justice Traynor for a unanimous California Supreme Court in Bernhard v. Bank of America Nat. Trust & Savings Assn. made the point succinctly:“No satisfactory rationalization has been advanced for the requirement of mutuality. Just why a party who was not bound by a previous action should be precluded from asserting it as res judicata against a party who was bound by it is difficult to comprehend.”

Page 197 of 201

to afford a litigant more than one full and fair opportunity for judicial resolution of the same issue.” The Court strongly suggested a negative answer to that question:

In any lawsuit where a defendant, because of the mutuality principle, is forced to present a complete defense on the merits to a claim which the plaintiff has fully litigated and lost in a prior action, there is an arguable misallocation of resources. To the extent the defendant in the second suit may not win by asserting, without contradiction, that the plaintiff had fully and fairly, but unsuccessfully, litigated the same claim in the prior suit, the defendant's time and money are diverted from alternative uses—productive or otherwise—to relitigation of a decided issue. And, still assuming that the issue was resolved correctly in the first suit, there is reason to be concerned about the plaintiff’s allocation of resources. Permitting repeated litigation of the same issue as long as the supply of unrelated defendants holds out reflects either the aura of the gaming table or ‘a lack of discipline and of disinterestedness on the part of the lower courts, hardly a worthy or wise basis for fashioning rules of procedure.’ Although neither judges, the parties, nor the adversary system performs perfectly in all cases, the requirement of determining whether the party against whom an estoppel is asserted had a full and fair opportunity to litigate is a most significant safeguard.

B

The [citation omitted] case involved defensive use of collateral estoppel—a plaintiff was estopped from asserting a claim that the plaintiff had previously litigated and lost against another defendant. The present case, by contrast, involves offensive use of collateral estoppel—a plaintiff is seeking to estop a defendant from relitigating the issues which the defendant previously litigated and lost against another plaintiff. In both the offensive and defensive use situations, the party against whom estoppel is asserted has litigated and lost in an earlier action. ... Nevertheless, several reasons have been advanced why the two situations should be treated differently.

. . .

A[n] ... argument against offensive use of collateral estoppel is that it may be unfair to a defendant. If a defendant in the first action is sued for small or nominal damages, he may have little incentive to defend vigorously, particularly if future suits are not foreseeable. [Citation omitted] (application of offensive collateral estoppel denied where defendant did not appeal an adverse judgment awarding damages of $35,000 and defendant was later sued for over $7 million). Allowing offensive collateral estoppel may also be unfair to a defendant if the judgment relied upon as a basis for the estoppel is itself inconsistent with one or more previous judgments

Page 198 of 201

in favor of the defendant.1414 Still another situation where it might be unfair to apply offensive estoppel is where the second action affords the defendant procedural opportunities unavailable in the first action that could readily cause a different result.1515

C

We have concluded that the preferable approach for dealing with these problems in the federal courts is not to preclude the use of offensive collateral estoppel, but to grant trial courts broad discretion to determine when it should be applied. The general rule should be that in cases where a plaintiff could easily have joined in the earlier action or where, either for the reasons discussed above or for other reasons, the application of offensive estoppel would be unfair to a defendant, a trial judge should not allow the use of offensive collateral estoppel.

In the present case, however, none of the circumstances that might justify reluctance to allow the offensive use of collateral estoppel is present. The application of offensive collateral estoppel will not here reward a private plaintiff who could have joined in the previous action, since the respondent probably could not have joined in the injunctive action brought by the SEC even had he so desired.1717 Similarly, there is no unfairness to the petitioners in applying offensive collateral estoppel in this case. First, in light of the serious allegations made in the SEC’s complaint against the petitioners, as well as the foreseeability of subsequent private suits that typically follow a successful Government judgment, the petitioners had every incentive to litigate the SEC lawsuit fully and vigorously.1818 Second, the judgment in the SEC action was not inconsistent with any previous decision. Finally, there will in the respondent’s action be no procedural opportunities available to the petitioners that were unavailable in the first action of a kind that might be likely to cause a different result.

14 14 In Professor Currie’s familiar example, a railroad collision injures 50 passengers all of whom bring separate actions against the railroad. After the railroad wins the first 25 suits, a plaintiff wins in suit 26. Professor Currie argues that offensive use of collateral estoppel should not be applied so as to allow plaintiffs 27 through 50 automatically to recover. Currie, supra, 9 Stan.L.Rev., at 304. See Restatement (Second) of Judgments § 88(4).15 15 If, for example, the defendant in the first action was forced to defend in an inconvenient forum and therefore was unable to engage in full scale discovery or call witnesses, application of offensive collateral estoppel may be unwarranted. Indeed, differences in available procedures may sometimes justify not allowing a prior judgment to have estoppel effect in a subsequent action even between the same parties, or where defensive estoppel is asserted against a plaintiff who has litigated and lost. The problem of unfairness is particularly acute in cases of offensive estoppel, however, because the defendant against whom estoppel is asserted typically will not have chosen the forum in the first action. 17 17 ... Moreover, consolidation of a private action with one brought by the SEC without its consent is prohibited by statute.18 18 After a 4-day trial in which the petitioners had every opportunity to present evidence and call witnesses, the District Court held for the SEC. The petitioners then appealed to the Court of Appeals for the Second Circuit, which affirmed the judgment against them. Moreover, the petitioners were already aware of the action brought by the respondent, since it had commenced before the filing of the SEC action.

Page 199 of 201

We conclude, therefore, that none of the considerations that would justify a refusal to allow the use of offensive collateral estoppel is present in this case. Since the petitioners received a “full and fair” opportunity to litigate their claims in the SEC action, the contemporary law of collateral estoppel leads inescapably to the conclusion that the petitioners are collaterally estopped from relitigating the question of whether the proxy statement was materially false and misleading.

. . .

The judgment of the Court of Appeals is

Affirmed.

Mr. Justice Rehnquist, dissenting.

It is admittedly difficult to be outraged about the treatment accorded by the federal judiciary to petitioners’ demand for a jury trial in this lawsuit. Outrage is an emotion all but impossible to generate with respect to a corporate defendant in a securities fraud action, and this case is no exception. But the nagging sense of unfairness as to the way petitioners have been treated, engendered by the imprimatur placed by the Court of Appeals on respondent's “heads I win, tails you lose” theory of this litigation, is not dispelled by this Court’s antiseptic analysis of the issues in the case. It may be that if this Nation were to adopt a new Constitution today, the Seventh Amendment guaranteeing the right of jury trial in civil cases in federal courts would not be included among its provisions. But any present sentiment to that effect cannot obscure or dilute our obligation to enforce the Seventh Amendment, which was included in the Bill of Rights in 1791 and which has not since been repealed in the only manner provided by the Constitution for repeal of its provisions.

. . .

C

Judged by the foregoing principles, I think it is clear that petitioners were denied their Seventh Amendment right to a jury trial in this case. Neither respondent nor the Court doubts that at common law as it existed in 1791, petitioners would have been entitled in the private action to have a jury determine whether the proxy statement was false and misleading in the respects alleged. The reason is that at common law in 1791, collateral estoppel was permitted only where the parties in the first action were identical to, or in privity with, the parties to the subsequent action. It was not until 1971 that the doctrine of mutuality was abrogated by this Court in certain limited circumstances. But developments in the judge-made doctrine of collateral estoppel, however salutary, cannot, consistent with the Seventh Amendment, contract in any material fashion the right to a jury trial that a defendant would have enjoyed in 1791.

Page 200 of 201

. . .

In the instant case, resort to the doctrine of collateral estoppel does more than merely contract the right to a jury trial: It eliminates the right entirely and therefore contravenes the Seventh Amendment.

. . .

Notes and Questions:

1. What new factors does Parklane introduce into collateral estoppel analysis? What are the exceptions to the prima facie case where the elements of collateral estoppels exist? One of them is addressed in DeGuelle v. Camilli, 724 F.3d 933, 935 (7th Cir., 2013): “The party against whom the issue had been resolved must have had, first, a ‘full and fair opportunity’ to litigate the issue in the previous suit (where ‘opportunity’ includes incentive—the parties could foresee that the same issue might arise in a future litigation in which the winner would assert collateral estoppel), and, second, a meaningful opportunity to appeal the resolution of the issue....”

2. Bernhard is the leading case on defensive collateral estoppel. Parklane is the leading case on offensive collateral estoppel.

3. As Justice Rehnquist’s dissent states: “developments in the judge-made doctrine of collateral estoppel ... cannot, consistent with the Seventh Amendment, contract in any material fashion the right to a jury trial that a defendant would have enjoyed in 1791.” This means he would also be opposed to the complexity and administrative adjudication exceptions to the Seventh Amendment.

Page 201 of 201